Exhibit 4.3
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AMENDED AND RESTATED
PARTICIPATION AGREEMENT
dated as of December 27, 2001
among
▇▇▇▇ & ▇▇▇▇▇▇, INC.,
as Lessee
SELCO SERVICE CORPORATION,
as Owner Participant
NOTE PURCHASERS NAMED HEREIN,
as Note Purchasers
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
and
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
(formerly known as First Security Bank, National Association)
as Indenture Trustee
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Table of Contents
Page
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ARTICLE I. COMMITMENTS OF THE PARTICIPANTS ................................................. 3
Section 1.1. Issue and Sale of Series A Notes............................................. 3
Section 1.2. Investments by the Owner Participant ........................................ 3
Section 1.3. The Closing Date ............................................................ 4
Section 1.4. Expiration of Commitments ................................................... 4
Section 1.5. Several Commitments ......................................................... 4
ARTICLE II. TRANSACTIONAL EXPENSES .......................................................... 5
Section 2.1. Transactional Expenses to be Borne by Owner Trustee ......................... 5
Section 2.2. Transactional Expenses to be Borne by Lessee ................................ 5
ARTICLE III. WARRANTIES AND REPRESENTATIONS .................................................. 6
Section 3.1. Warranties and Representations of the Owner Trustee ......................... 6
Section 3.2. Warranties and Representations of the Lessee ................................ 8
Section 3.3. Warranties and Representations of the Indenture Trustee .....................19
Section 3.4. Private Offering ............................................................20
Section 3.5. Representations And Covenants Of The Participants ...........................21
Section 3.6. Reliance by Holders of the ClO2 Notes .......................................23
ARTICLE IV. CLOSING CONDITIONS ..............................................................24
Section 4.1. Conditions Precedent to Investment by each Participant ......................24
Section 4.2. Additional Conditions Precedent to Investments by Owner Participant .........27
Section 4.3. Additional Conditions Precedent to Series A Note Purchases ..................27
ARTICLE V. SPECIAL RIGHTS OF NOTE PURCHASERS ...............................................28
ARTICLE VI. [INTENTIONALLY OMITTED] .........................................................29
ARTICLE VII. GENERAL TAX INDEMNITY ...........................................................29
Section 7.1. Tax Indemnitee Defined ......................................................29
Section 7.2. Taxes Indemnified ...........................................................29
Section 7.3. Taxes Excluded ..............................................................31
Section 7.4. All Tax Obligations in this Section, Etc ....................................33
Section 7.5. Payments to Lessee ..........................................................33
Section 7.6. Procedures ..................................................................34
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Section 7.7. Contest ..............................................................35
Section 7.8. Reports ..............................................................37
Section 7.9. Survival .............................................................37
ARTICLE VIII. INDEMNITIES OF THE OWNER TRUSTEE AND THE
OWNER PARTICIPANT ........................................................38
ARTICLE IX. INDEMNIFICATION ..........................................................39
Section 9.1. General Indemnity ....................................................39
Section 9.2. Payments, Survival and other Provisions ..............................39
Section 9.3. No Guarantee of Residual Value or Notes ..............................40
ARTICLE X. TRANSACTION ECONOMICS ...................................................40
ARTICLE XI. RESTRICTIONS ON TRANSFER OF BENEFICIAL
INTEREST ................................................................40
ARTICLE XII. LESSEE ASSUMPTION OF NOTES ..............................................44
Section 12.1. Assumption ...........................................................44
Section 12.2. No Other Assumption; Payment of Expenses .............................46
ARTICLE XIII. REFINANCING OF NOTES .....................................................47
ARTICLE XIV. MISCELLANEOUS .............................................................50
Section 14.1. Amendments ...........................................................50
Section 14.2. Notices ..............................................................50
Section 14.3. Survival .............................................................51
Section 14.4. Successors and Assigns ...............................................51
Section 14.5. Governing Law ........................................................51
Section 14.6. Counterparts .........................................................51
Section 14.7. Headings and Table of Contents .......................................51
Section 14.8. Limitations of Liability. ............................................52
Section 14.9. Purchase of Beneficial Interest by Lessee; Termination of
Trust by Owner Participant ...........................................53
Section 14.10. Certain Limitations in Reorganization ................................53
Section 14.11. Amendment of Indenture, Deed of Trust and Trust
Agreement ............................................................54
Section 14.12. Submission to Jurisdiction ...........................................54
Section 14.13. Waiver of Jury Trial .................................................55
Section 14.14. Complete Facility ....................................................55
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Attachments to Participation Agreement:
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Schedule 1 - Note Purchaser Information
Schedule 3.2(r) - ERISA Matters
Schedule 3.2(s) - Environmental Matters
Schedule 3.2(w) - Existing Leases
Annex I - Definitions
Exhibit A - Form of Trust Agreement
Exhibit B - Form of Site Lease
Exhibit C - Form of Facility Lease
Exhibit D - Form of Trust Indenture and Security Agreement
Exhibit E - Form of Deed of Trust
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AMENDED AND RESTATED
PARTICIPATION AGREEMENT
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This AMENDED AND RESTATED Participation Agreement (as it may
be amended from time to time) dated as of December 27, 2001 (the "Effective
Date") is among ▇▇▇▇ & ▇▇▇▇▇▇, Inc., a Delaware corporation (herein, together
with its successors and assigns, the "Lessee"), SELCO Service Corporation, an
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Ohio corporation (herein, together with its successors and assigns, the "Owner
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Participant"), the Note Purchasers named in Schedule 1 hereto (the "Note
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Purchasers"), Wilmington Trust Company, not in its individual capacity except as
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expressly stated herein, but solely as trustee (herein in such capacity,
together with its successors and assigns, called the "Owner Trustee") under the
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Trust Agreement referred to below, and ▇▇▇▇▇ FARGO Bank NORTHWEST, National
Association (formerly known as First Security Bank, National Association)
(herein in such capacity, together with its successors and assigns, called the
"Indenture Trustee"). The Owner Participant and the Note Purchasers are herein
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sometimes referred to collectively as the "Participants" and individually as a
"Participant".
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RECITALS
A. The capitalized terms used in this Participation Agreement
shall have the respective meanings specified in Annex I attached hereto, unless
otherwise herein defined or the context hereof shall otherwise require.
B. The parties hereto entered into a certain Participation
Agreement as of September 15, 1999 (the "Original Participation Agreement");
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C. The parties hereto desire to amend and restate the Original
Participation Agreement, on the terms and conditions set forth herein, it being
understood that this Agreement is an amendment and restatement of the Original
Participation Agreement, which shall remain in full force and effect, as amended
and restated hereby;
D. For the avoidance of doubt, each party hereto consents to
the entry by each party thereto in each of the Amended and Restated Facility
Lease dated as of December 27, 2001 between the Owner Trustee and the Lessee,
Amended and Restated Trust Indenture dated as of December 27, 2001 between the
Owner Trustee and the Indenture Trustee, and Amendment No.1 to the Site Lease
dated as of December 27, 2001 between the Lessee and the Owner Trustee. In
addition, each party hereto acknowledges the execution and delivery of certain
"Operative Agreements" as defined under this Agreement.
E. The Owner Trustee and the Owner Participant have entered
into a Trust Agreement dated as of September 15, 1999, substantially in the form
attached hereto as Exhibit A, and pursuant to the authorities and directions
contained in the Trust Agreement, the Owner Trustee entered into:
(1) a Site Lease substantially in the form attached hereto as
Exhibit B between the Lessee, as landlord, and the Owner Trustee, as
tenant, providing for the grant by the Lessee to the Owner Trustee of a
leasehold estate in the Site for the Facility and certain other rights,
licenses and easements relating to the Facility, but which shall not,
during the Term of the Facility Lease, in any event require the Owner
Trustee, as tenant, to pay Rent under the Site Lease which is not fully
offset by the obligation of the Lessee to pay Periodic Site Rent on a
dollar-for-dollar basis pursuant to the Facility Lease;
(2) a Facility Lease substantially in the form attached hereto as
Exhibit C between the Owner Trustee, as lessor, and the Lessee, as
lessee, for the Facility, providing for the lease of the Facility and the
sublease of the Site for the Facility to the Lessee;
(3) a Trust Indenture and Security Agreement substantially in the
form attached hereto as Exhibit D between the Owner Trustee and the
Indenture Trustee, under which the Notes will be issued and secured, and
providing for particular description of certain Collateral;
(4) a Deed of Trust substantially in the form of Exhibit E between
the Owner Trustee, as grantor, the deed of trust trustee thereunder, and
the Indenture Trustee, as beneficiary, providing for the grant of a
mortgage on the Facility, the Owner Trustee's leasehold interest in the
Site and the Owner Trustee's interests under the Site Lease and the
Facility Lease; and
(5) a Tax Indemnity Agreement between the Lessee and the Owner
Participant.
NOW THEREFORE, in consideration of the promises and the mutual
agreements contained herein, the parties hereto hereby agree that the Original
Participation Agreement shall be restated and amended as follows:
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ARTICLE I.
COMMITMENTS OF THE PARTICIPANTS
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Section 1.1. Issue and Sale of Series A Notes.
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(a) The Series A Notes. In order to finance a portion of the Facility Cost,
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the Trust Agreement authorizes the Owner Trustee to issue and sell its 8.96%
Secured Notes, Series A, due January 2, 2008 (the "Series A Notes") in an
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aggregate principal amount not to exceed the aggregate amount of the commitments
of the Note Purchasers set forth below. The Series A Notes are issued under and
secured by the Indenture, will be dated the date of issue and will mature on
January 2, 2008. The Series A Notes will bear interest at the rate of 8.96% per
annum prior to maturity payable semiannually on each Rent Payment Date, and are
to be otherwise substantially in the form attached to the Indenture as Exhibit
A.
(b) Commitment of Note Purchasers. Subject to the terms and conditions
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hereof and on the basis of the representations and warranties hereinafter set
forth, the Owner Trustee agrees to issue and sell to each Note Purchaser, and
each Note Purchaser agrees to purchase from the Owner Trustee, on the Closing
Date, Series A Notes of the Owner Trustee at a price of 100% of the principal
amount thereof and in an aggregate principal amount equal to such Note
Purchaser's Commitment as set forth in Schedule 1 hereto. The Series A Notes
delivered to each Note Purchaser on the Closing Date will, unless otherwise
indicated on Schedule 1 hereto, be in the form of a single Series A Note
registered in the name of such Note Purchaser.
(c) Failure to Deliver. If at the Closing the Owner Trustee fails to tender
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to any Series A Note Purchaser the Notes to be purchased by such Note Purchaser
at the Closing or if the conditions to the obligation of such Note Purchaser
specified in Section 4 for the Closing have not been fulfilled, each Note
Purchaser may thereupon elect to be relieved of all further obligations under
this Agreement. Nothing in this Section shall operate to relieve the Owner
Trustee, the Owner Participant or the Lessee from their respective obligations
hereunder or to waive any of any Note Purchaser's rights against the Owner
Trustee, the Owner Participant or the Lessee.
Section 1.2. Investments by the Owner Participant. (d) Subject to the terms
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and conditions hereof and on the basis of the representations and warranties
hereinafter set forth and set forth in the other Operative Agreements, on the
Closing Date the Owner Participant will pay to the Owner Trustee, an amount
equal to the Facility Cost for the Facility less the proceeds of the Series A
Notes issued on the Closing Date. The
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aggregate investment required to be made by the Owner Participant pursuant to
this Section 1.2(a) shall not exceed $17,398,444.06.
(b) In addition, the Owner Participant will make such further payments as
may be necessary from time to time to permit the Owner Trustee to satisfy its
obligations under Section 2.
(c) If at the Closing the conditions to the obligations of the Owner
Participant specified in Section 4 for the Closing have not been fulfilled, the
Owner Participant may thereupon elect to be relieved of all further obligations
under this Agreement. Nothing in this Section shall operate to relieve the
Lessee from its obligations hereunder or to waive any of the Owner Participant's
rights against the Lessee.
Section 1.3. The Closing Date. The closing of the transactions contemplated
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hereby (the "Closing") shall take place after 10:00 a.m., New York City Time, on
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September 30, 1999 or such other date as the parties hereto shall mutually agree
(the "Closing Date"), at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. On the Closing Date, the payment by the Owner
Participant to be made pursuant to Section 1.2(a) and payment for the Series A
Notes to be issued on the Closing Date shall be made not later than 11:00 a.m.,
New York City Time, by transferring or delivering such amounts, in funds
immediately available on the Closing Date, to the Owner Trustee. Subject to the
applicable conditions set forth in Section 4, the Owner Trustee hereby directs
the Indenture Trustee, and the Indenture Trustee hereby agrees, to apply for the
account of the Owner Trustee on the Closing Date the proceeds of the sale of the
Series A Notes to the account of the Seller, and the Owner Participant will
cause to be paid to the Seller for the account of the Owner Trustee, the amounts
to be invested and paid by the Owner Participant pursuant to Section 1.2 on the
Closing Date.
Section 1.4. Expiration of Commitments. The commitment of the Owner
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Participant under Section 1.2(a) and the several commitments of the Note
Purchasers hereunder shall expire on September 30, 1999.
Section 1.5. Several Commitments. The obligations hereunder of the
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Participants shall be several and not joint and no Participant shall be liable
or responsible for the acts or defaults of any other Participant.
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ARTICLE II.
TRANSACTIONAL EXPENSES
----------------------
Section 2.1. Transactional Expenses to be Borne by Owner Trustee. If the
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Owner Participant shall have made its investment provided for in Section 1.2(a)
with respect to the Closing and the Facility shall have been purchased, the
Owner Trustee will, subject to the final clause of the last sentence of Section
2.2, pay all expenses relating to the transactions contemplated by this
Agreement (other than any expenses incurred by the Lessee, including without
limitation the fees and expenses of Stoel Rives LLP, its counsel), including but
not limited to: (i) the cost of reproducing the Operative Agreements; (ii) the
reasonable fees and expenses of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for the
Owner Participant; (iii) the reasonable fees and expenses of ▇▇▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇, special Ohio counsel to the Owner Participant; (iv) the reasonable fees
and expenses of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel for the Note Purchasers; (v)
the reasonable out-of-pocket expenses of the Participants; (vi) the cost of
delivering to the main office of each Note Purchaser, insured to the reasonable
satisfaction of such Note Purchaser, the Series A Notes purchased by such Note
Purchaser on the Closing Date; (vii) the initial fees and expenses of the Owner
Trustee under the Trust Agreement (including the reasonable fees and expenses of
Morris, James, Hitchens & ▇▇▇▇▇▇▇▇, its counsel, incurred in connection with the
negotiation and delivery of the Operative Agreements); (viii) the initial fees
and expenses of the Indenture Trustee under the Indenture (including the
reasonable fees and expenses of ▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, its counsel, incurred in
connection with the negotiation and delivery of the Operative Agreements); (ix)
the reasonable fees and expenses of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, local counsel for the
Participants; and (x) the fees and expenses of Independent Equipment Company.
Section 2.2. Transactional Expenses to be Borne by Lessee. If the
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transactions contemplated by this Agreement with respect to the Closing are not
consummated, the Lessee will pay all expenses relating to the transactions
contemplated by this Agreement, including without limitation those referred to
in Section 2.1. If the transactions contemplated by this Agreement with respect
to the Closing are consummated, the Lessee shall in any event pay: (i) the fees
and expenses of counsel for the Lessee; (ii) the cost of delivering to or from
the home office of any Note Purchaser from or to the Indenture Trustee, insured
to the reasonable satisfaction of such Note Purchaser, any Notes surrendered
pursuant to the Indenture and any Note issued in substitution or replacement for
the surrendered Notes; (iii) the expenses of the Owner Trustee, the Indenture
Trustee and the Participants, including reasonable fees and expenses of their
counsel, in connection with any amendments, waivers or consents
5
requested by any party in connection with any of the Operative Agreements, any
enforcement action undertaken in connection with the Operative Agreements and
all recording and filing fees, stamp taxes and other recording or filing taxes
in connection with the recordation or filing of any such amendments, waivers and
consents and in connection with any continuation statements or other documents
filed to maintain and protect the rights of the parties under the Operative
Agreements; (iv) the ongoing fees and expenses of the Owner Trustee under the
Trust Agreement, including fees and expenses incurred in connection with the
enforcement of the obligations of the Lessee under the Operative Agreements; (v)
the ongoing fees and expenses of the Indenture Trustee under the Indenture,
including fees and expenses incurred in connection with the enforcement of the
obligations of the Lessee under the Operative Agreements; (vi) the premiums for
the title insurance and the cost of surveys required by Section 4 and (vii) any
costs set forth in Section 2.1 hereof to the extent that the total of all such
costs exceeds 0.725% of the Facility Cost.
ARTICLE III.
WARRANTIES AND REPRESENTATIONS
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Section 3.1. Warranties and Representations of the Owner Trustee. (a)
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Wilmington Trust Company warrants and represents in its individual capacity
notwithstanding the provisions of Section 14.8(b) or any similar provision of
any other Operative Agreement, that as of the Closing Date and as of the
Effective Date:
(i) Wilmington Trust Company
(A) is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(B) has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement and this Agreement;
and
(C) has full right, power and authority under the Trust Agreement
to enter into and perform its obligations, as Owner Trustee, under the
Owner Trustee Agreements other than the Trust Agreement.
(ii) There are no proceedings pending or, to the knowledge of
Wilmington Trust Company, threatened and to the knowledge of Wilmington
Trust Company, there is no existing basis for any such proceedings, against
or
6
affecting Wilmington Trust Company in any court or before any governmental
authority or arbitration board or tribunal which, if adversely determined, might
materially and adversely affect the Trust Estate or would call into question the
right, power and authority of Wilmington Trust Company to enter into or perform
the Owner Trustee Agreements.
(iii) The Trust Estate is free and clear of any liens and encumbrances
which result from claims against Wilmington Trust Company in its individual
capacity; and Wilmington Trust Company has not by affirmative act, in its
individual capacity, conveyed any interest in the Trust Estate to any Person or
subjected the Trust Estate to any Lien except pursuant to the Operative
Agreements.
(iv) The Trust Agreement and (insofar as it is entering into this
Agreement in its individual capacity) this Agreement have been duly authorized
by all necessary corporate action on the part of Wilmington Trust Company in its
individual capacity, have been duly executed and delivered by Wilmington Trust
Company in its individual capacity, and constitute the valid and binding
obligations of Wilmington Trust Company in its individual capacity.
(v) Neither the nature of the Trust Estate, nor any relationship
between Wilmington Trust Company and any other Person, nor any circumstance in
connection with the execution and delivery of the Trust Agreement or this
Agreement, is such as to require a consent, approval or authorization of, or
filing, registration or qualification with, any governmental authority of the
State of Delaware or the federal government of the United States of America
governing the banking or trust powers of Wilmington Trust Company on the part of
Wilmington Trust Company in connection with the execution and delivery of the
Trust Agreement or this Agreement.
(vi) The execution and delivery of the Trust Agreement and this
Agreement and compliance by Wilmington Trust Company with all of the provisions
thereof do not and will not contravene any law regulating the banking or trust
activities or business of Wilmington Trust Company, or any order of any court or
governmental authority or agency applicable to or binding on Wilmington Trust
Company or its certificate of incorporation or its by-laws.
(b) The Owner Trustee warrants and represents as Owner Trustee that:
(i) The other Owner Trustee Agreements are duly authorized by the Trust
Agreement and the Owner Trustee Agreements have been duly
7
executed and delivered by the Owner Trustee, as trustee under the Trust
Agreement.
(ii) The Owner Trustee is not in violation of any term of any of the
Owner Trustee Agreements.
(iii) Neither the nature of the Trust Estate, nor any relationship
between the Owner Trustee and any other Person, nor any circumstance in
connection with the offer, issue, sale or delivery of the Beneficial
Interest or the Series A Notes or the execution and delivery of the Owner
Trustee Agreements is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority of the State of Delaware or the federal government
of the United States of America governing the banking or trust powers of
Wilmington Trust Company on the part of the Owner Trustee in connection
with the execution and delivery of the Owner Trustee Agreements or the
offer, issue, sale or delivery of the Beneficial Interest or the Series A
Notes.
(iv) The Owner Trustee has not by affirmative act conveyed any
interest in the Trust Estate to any Person or subjected the Trust Estate to
any Lien except pursuant to the Operative Agreements.
Section 3.2. Warranties and Representations of the Lessee. The Lessee
--------------------------------------------
warrants and represents that as of Closing on the Closing Date:
(a) Organization and Authority. The Lessee (i) is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has all requisite power and authority to own or hold under lease
its assets and properties, conduct its business as now conducted and as
presently proposed to be conducted and enter into and perform its obligations
under this Agreement and each of the other Operative Agreements to which it is
or will be a party; and (iii) is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction wherein the failure to be
so qualified would have a Material Adverse Effect.
(b) Due Authorization, Enforceability, etc. The execution, delivery and
--------------------------------------
performance of the Lessee Agreements and the compliance by the Lessee with the
terms and provisions thereof have been duly authorized by all necessary
corporate action of the Lessee. Each of the Lessee Agreements has been duly
executed and delivered by the Lessee. Assuming the due authorization, execution
and delivery by each other party thereto, each of the Lessee Agreements
constitutes the legal, valid and binding obligations of the Lessee, enforceable
against the Lessee in accordance with their respective terms, except as the same
may be limited by bankruptcy, insolvency, fraudulent conveyance,
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reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles of equity.
(c) No Conflicts. The execution, delivery and performance by the Lessee of
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each of the Lessee Agreements, the consummation by the Lessee of the
transactions contemplated thereby, and compliance by the Lessee with the terms
and provisions thereof, do not and will not (i) conflict with or result in any
breach of any agreement to which the Lessee is a party, (ii) conflict with any
Applicable Law which could reasonably be expected to result in a Material
Adverse Effect, (iii) conflict with the certificate of incorporation or by-laws
of the Lessee, or (iv) result in the creation of any Lien (except Permitted
Encumbrances) upon any of the property or assets of the Lessee pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or any other
agreement, contact or instrument to which the Lessee is a party or by which its
property or assets are bound.
(d) Governmental Consent. Neither the nature of the Lessee or any of its
--------------------
business or properties, nor any relationship between the Lessee and any other
Person, nor any circumstance in connection with the execution and delivery of
the Lessee Agreements is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any regulatory body, state,
Federal or local, on the part of the Lessee as a condition to the execution and
delivery of the Lessee Agreements.
(e) Litigation. Except as described in the Lessee's Annual Report on SEC
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Form 10-K dated March 24, 1999, there are no proceedings pending, or to the
knowledge of the Lessee threatened, against or affecting the Lessee in any court
or before any governmental authority or arbitration board or tribunal which if
adversely determined would have a Material Adverse Effect, nor are there any
other circumstances which, to the knowledge of the Lessee, would lead to or
result in any such proceedings. The Lessee is not in default with respect to any
order of any court, governmental authority or arbitration board or tribunal.
(f) No Defaults. No Lease Default or Lease Event of Default has occurred
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and is continuing. The Lessee is not in default in the payment of principal or
interest on any indebtedness for borrowed money and no event of default has
occurred under any instrument or instruments or agreements to which the Lessee
or any Person acting at the instruction of the Lessee with respect to the
Lessee's obligations thereunder is a party (i) under and subject to which any
indebtedness for borrowed money has been issued or (ii) pursuant to which the
Lessee has any obligations the non-performance of which could reasonably be
expected to have a Material Adverse Effect; and no event has occurred and is
continuing under the provisions of any such instrument or agreement
9
which with the lapse of time or the giving of notice, or both, would
constitute such an event of default thereunder.
(g) No Materially Adverse Contracts. The Lessee is not a party to, or bound
-------------------------------
or affected by, any contract or agreement or subject to any judgment, order,
writ, injunction, rule or regulation or decree or other action of any court or
other governmental authority or agency, or the award of any arbitrator, or any
charter or contractual restriction that materially adversely affects or in the
future may (so far as the Lessee can now reasonably foresee based on facts known
to the Lessee) materially adversely affect the business, Properties, or
financial condition of the Lessee or impair the ability of the Lessee to perform
its obligations under the Lessee Agreements.
(h) Location of Chief Place of Business and Chief Executive Office. The
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chief executive office and principal place of business of the Lessee and the
office where the Lessee keeps its corporate records concerning the Facility, the
Site and the Operative Agreements is located at ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
(i) Title. The Owner Trustee has good and marketable title to the Facility,
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free and clear of all Liens other than (i) any Liens thereon for taxes,
assessments, levies, fees and other governmental and similar charges not due and
payable, (ii) any Liens of mechanics, suppliers, materialmen and laborers for
work or service performed or materials furnished in connection with the Facility
which are not due and payable and are insured over by the Title Policy relating
to the Facility issued at Closing, and (iii) those exceptions to title set forth
on Schedule B to the Title Policy relating to the Facility issued at Closing.
(j) Financial Statements. The audited consolidated balance sheet and
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consolidated statements of income and retained earnings and cash flows of the
Lessee for the fiscal years ended December 31, 1998, December 31, 1997, December
31, 1996 and December 31, 1995 fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of the
Lessee as of such dates and the results of its operations for the periods then
ended. The unaudited consolidated balance sheet and consolidated statements of
income and retained earnings and cash flows of the Lessee for the fiscal quarter
ended June 30, 1999, fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Lessee as of
such date and the results of its operations for the period then ended, subject
to normal year-end adjustments. Since June 30, 1999, there has been no change in
such financial condition or results of operations which could reasonably be
expected to have a Material Adverse Effect.
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(k) Full Disclosure. The Private Placement Memorandum, the financial
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statements referred to in clause (j) above, the Lessee Agreements and all other
written statements furnished by or on behalf of the Lessee to the Participants
in connection with the transactions contemplated by this Agreement, do not,
taken as a whole, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading. There is no fact peculiar to the Lessee which the Lessee has not
disclosed to the Participants in writing which has a Material Adverse Effect on
nor, so far as the Lessee can now foresee, will have a Material Adverse Effect
on the business, Properties or financial condition of the Lessee or impair the
ability of the Lessee to perform its obligations under the Lessee Agreements.
(l) Use of Proceeds. The net proceeds from the sale of the Series A Notes
---------------
will be applied to the payment of a portion of the Facility Cost. None of the
transactions contemplated in the Operative Agreements (including, without
limitation thereof, the use of the proceeds from the sale of the Series A Notes)
or any direct or indirect use or application of the proceeds of the Notes will
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II.
(m) Investment Company Act. The Lessee is not an "investment company" or a
----------------------
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(n) Holding Company. The Lessee is not subject to regulation as a "holding
---------------
company," an "affiliate" of a "holding company," or a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(o) Compliance with Law. The Lessee:
-------------------
(i) is not, to the knowledge of the Lessee after reasonable inquiry,
in violation of any laws, ordinances, governmental rules or regulations to
which it is subject, and
(ii) has not failed to obtain any license, permit, franchise or other
governmental authorization (and in the case of any temporary permits,
application for permanent permits have been made and are pending) necessary
to the ownership or operation of its property or to the conduct of its
business,
11
which violation or failure to obtain would materially adversely affect the
business, properties or financial condition of the Lessee or impair the ability
of the Lessee to perform its obligations under the Lessee Agreements.
(p) Taxes. All tax returns required to be filed by the Lessee in any
-----
jurisdiction (other than those for which the failure to file would not have a
Material Adverse Effect) have, in fact, been filed, and all taxes, assessments,
fees and other governmental charges upon the Lessee or upon any of its
properties, income or franchises, which are shown to be due and payable in such
returns have been paid. Except as described in the Lessee's Annual Report on SEC
Form 10-K dated March 24, 1999, the Lessee does not know of any material
proposed additional tax assessment against it for which adequate provision has
not been made on its accounts and no controversy in respect of additional income
taxes due is pending or to the knowledge of the Lessee threatened which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect. The provisions for taxes on the books of the Lessee are adequate for all
open years, and for its current fiscal period.
(q) Restrictions on Lessee. The Lessee is not a party to or bound by any
----------------------
security, contract, indenture, agreement, instrument, order of any court or
governmental agency, law or rule or regulation which restricts the right or
ability of the Lessee to enter into leases of the type of the Facility Lease or
the Site Lease.
(r) Employee Retirement Income Security Act of 1974.
-----------------------------------------------
(i) The consummation of the transactions provided for in the Operative
Agreements and compliance by the Lessee with the provisions thereof will
not involve any prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code. The representation of the Lessee in the
preceding sentence is made in reliance upon and subject to the accuracy of
the representation of each Participant in Section 3.5(c) as to the source
of funds to be used by such Participant in financing the acquisition of the
Facility.
(ii) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law, except for such
non-compliance which would not reasonably be expected to have a Material
Adverse Effect. Each Plan intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the
Lessee's knowledge, nothing has occurred which would cause the loss of such
qualification.
12
(iii) There are no pending, or to the Lessee's knowledge, threatened claims
by any Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect. There has
been no prohibited transaction or other violation of the fiduciary
responsibility rule with respect to any Plan which could reasonably be expected
to result in a Material Adverse Effect.
(iv) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Pension Plan, other than as specified in Schedule 3.2(r) hereto.
(v) No Pension Plan (other than the Multiemployer Plans) has any Unfunded
Pension Liability.
(vi) Neither the Lessee nor any ERISA Affiliate has incurred, nor does it
reasonably expect to incure, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA), other than as specified in Schedule 3.2(r) hereto.
(vii) Neither the Lessee nor any ERISA Affiliate has transferred any
Unfunded Pension Liability to any Person or otherwise engaged in a transaction
that could be subject to Section 4069 of ERISA.
(viii) A complete list of all the Lessee's affiliates (within the meaning
specified in Section V(a)(1) of Prohibited Transaction Exemption 95-60 (issued
July 12, 1995)) and each Pension Plan currently in effect is set forth on
Schedule 3.2(r).
(s) Environmental Matters. To the knowledge of the Lessee after reasonable
inquiry: ---------------------
(i) neither the Lessee nor the Leased Property is in material
violation of any applicable Environmental Law;
(ii) the Lessee has obtained all material Governmental Approvals
required for the operations of the Facility by any applicable Environmental
Law;
(iii) there is no and has never been a material Release or threatened
material Release or disposal of any Hazardous Material at the Site and the
Site is not adversely affected by any material Release or threatened
material Release originating or emanating from any other property;
13
(iv) except as disclosed in the reports on Schedule 3.2(s), none of
which disclosures, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, the Site does not contain and
has not contained any: (v) underground storage tank, (w) material amounts
of asbestos containing building material, (x) any landfills or dumps, (y)
hazardous waste treatment, storage or disposal facility as defined pursuant
to RCRA or any comparable state law, or (z) site on or nominated for the
National Priority List promulgated pursuant to CERCLA or any state priority
list promulgated pursuant to any comparable state law;
(v) no circumstances exist that could be reasonably expected to (A)
form the basis of any Environmental Claims against the Leased Property that
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect or (B) cause the Leased Property to be subject to
any restrictions on ownership, occupancy, use or transferability under any
Environmental Law;
(vi) to the Lessee's knowledge, no Hazardous Materials that have been
generated at or transported from the Leased Property or any part thereof
have been disposed at any location that is listed or proposed for listing
on the National Priority List promulgated pursuant to CERCLA or any state
priority list promulgated pursuant to any comparable state law, or any
location that is or has been the subject of a CERCLA response action, and
all Hazardous Materials generated, used, treated, handled or stored at or
transported to or from the Leased Property or any part thereof and any
property currently or formerly owned or operated by the Lessee have been
disposed of in compliance in all material respects with all Environmental
Laws and applicable Environmental Permits;
(vii) the Lessee has not received any written or other notice,
mandate, order, Lien or request which remains pending under an
Environmental Law concerning any of the Leased Property or any part thereof
or relating to an alleged violation of an Environmental Law concerning the
Leased Property or any part thereof or relating to any potential adverse
action in any way involving environmental, health or safety matters
affecting the Leased Property or any part thereof;
(viii) there is no proceeding pending or, to Lessee's knowledge,
threatened against the Lessee by any Federal, state, or local court,
tribunal, administrative agency, department, commission, board or other
authority or instrumentality with respect to the presence or Release of any
Hazardous Material from the Leased Property or any part thereof; and
14
(ix) no Hazardous Materials have been Released from or on the Leased
Property or any part thereof for which Remedial Action could be required
under any Environmental Law or may be necessary to prevent or eliminate an
imminent and substantial endangerment to human health or the environment.
(t) Security Interests. The Indenture and the Deed of Trust create a valid
------------------
and perfected first priority lien and security interest in the Collateral
described therein, subject to Permitted Encumbrances, securing the payment of
all Secured Indebtedness, and all filings and other actions necessary or
desirable to perfect and protect such lien and security interest have been duly
taken at or prior to the Closing.
(u) Insurance. The Leased Property (including the Facility) is covered by
---------
the insurance required by Section 7 of the Facility Lease covering such Leased
Property and all premiums due in respect of such insurance have been paid.
(v) Coverage. The amount of the installment of Periodic Rent payable under
--------
the Facility Lease on each Rent Payment Date during the Basic Term thereof will
equal or exceed the sum of the interest payments and the payments or prepayments
of principal due on such Rent Payment Date on the Series A Notes. The amount of
Casualty Value and Termination Value under the Facility Lease payable on any
date will equal or exceed the sum of the principal amount of the Series A Notes
which will remain unpaid on such date plus accrued interest thereon.
(w) Leasehold Interest. The Lessee has good and marketable title to the
------------------
Site for the Facility, free and clear of all Liens other than (i) the interest
of the Owner Trustee under the Site Lease covering the Site and the interest of
the Lessee under the Facility Lease in the Site; (ii) any Liens thereon for
taxes, assessments, levies, fees and other governmental and similar charges not
due and payable; (iii) any Liens of mechanics, suppliers, materialmen and
laborers for work or service performed or materials furnished in connection with
the Facility which are not due and payable and are insured over by the Title
Policy relating to the Facility issued at Closing; (iv) any exceptions to title
set forth on Schedule B to the Title Policy relating to the Site issued at
Closing; (v) the leases set forth on Schedule 3.2(w) hereto; and (vi) minor
encumbrances, easements or reservations, rights of others for rights-of-way,
utilities and other similar purposes, zoning or other restrictions as to the use
of real properties, and leases and subleases thereof, in each case, which (A)
are necessary or appropriate for the conduct of the activities of the Lessee on
the Site or customarily exist on properties of business entities engaged in
similar activities and similarly situated and (B) do not in any event materially
impair the use or value of the Site.
15
(x) Complete Facility.
-----------------
(i) Exhibit B to the Facility Lease contains a complete description of
the entire Facility, which is located on the Site. Such items, together
with the Site Lease Property for the Facility, constitute an integrated and
self-contained pulp mill. The Owner Trustee's title and interest in the
Leased Property under the Facility Lease is sufficient to permit during the
Term of the Site Lease for the Site of the Facility (i) the locating,
occupying, owning, selling, leasing, connecting, operating, maintaining,
replacing, renewing, repairing and removing of the Facility, (ii) ingress
to and egress from the Leased Property leased under the Facility Lease,
(iii) the operating of the Leased Property leased under the Facility Lease
in such a manner as to cause the Facility to perform on a daily basis, in
commercial operation, the functions for which it was specifically designed
at Design Capacity in accordance with the Plans therefor, and (iv) the
preservation and enforcement by the Owner Trustee of its rights in and to
the Leased Property leased under the Facility Lease and the easements and
other rights in respect of the Site Lease Property described or referred to
in the Site Lease for the Site of the Facility.
(ii) There is presently no default by the Lessee or, to the Lessee's
knowledge, by any other party with respect to (1) any easements,
rights-of-way, licenses, utilities and other services which would
materially and adversely affect the services relating to the Facility or
(2) the ▇▇▇▇▇ River Agreement, the ▇▇▇▇▇ River Easement, the Railway
License or, except with respect to the matters addressed in Section 14.14,
the County Road Documents.
(iii) All utility services necessary for the operation for its
intended purposes of the Facility are installed and operational.
(iv) None of the Permitted Encumbrances will interfere in any material
respect with the use or possession of the Leased Property or any part
thereof or any other asset used in connection therewith or the use of or
the exercise by the Owner Trustee of its rights either under any Operative
Agreement or to the Leased Property.
(v) The Facility is situated wholly within the boundary lines of the
Site and does not encroach upon any contiguous or adjoining property;
except as disclosed in writing, neither the Site nor any part thereof is
considered part of a larger tax lot; the Facility does not violate any
rights granted under any easements or rights of way or any covenants or
restrictions affecting the Site or any part thereof, and any future
violation will not result in a reversion or forfeiture of title,
16
right of re-entry or power of termination; and the easements,
rights-of-way, covenants and restrictions affecting the Site or any part
thereof do not and will not interfere in any material respect with the use
or occupancy of the Leased Property or any part thereof, or any asset owned
or used in connection therewith, nor will the exercise of rights or
remedies thereunder result in any damage to the Leased Property or any part
thereof or diminution of value of the Leased Property or any part thereof.
(vi) Except as addressed in Section 14.14, all Permits that are or
will become Applicable Permits shall have been obtained, except Applicable
Permits customarily obtained or which are permitted by Applicable Law to be
obtained after the Closing Date (and the Lessee, having completed all
appropriate due diligence in connection therewith, has no reason to believe
that such Permits will not be granted in the usual course of business prior
to the date that such Permits are required by Applicable Law). All such
obtained Permits are in proper form, in full force and effect and are not
subject to any further appeal, consent or contest or to any unsatisfied
condition that may allow modification or revocation.
(y) Casualty Occurrence. No Casualty Occurrence has occurred, and the
-------------------
Leased Property may be used for the purposes contemplated by the Lessee in
accordance with the Facility Lease and the other Operative Agreements.
(z) Recordation and Filing. The Memorandum of Facility Lease and Memorandum
----------------------
of Site Lease have been duly recorded and are in a form sufficient to provide
notice of the interests purported to be created by the Facility Lease and Site
Lease, respectively. Upon the recordation of the Memorandum of Site Lease in the
county in which the Site is located, the Memorandum of Site Lease will have been
recorded or filed in such place in which recording or filing is required to
provide notice, under Applicable Law, of the interests created by the Site Lease
and to protect the validity and effectiveness thereof, and all Taxes, fees and
other public charges payable in connection with the filing and recordation of
the Memorandum of Site Lease have been paid. Upon the recordation of the
Memorandum of Facility Lease in the county where the Facility is located, the
Memorandum of Facility Lease will have been recorded or filed in such place in
which recording or filing is required to provide notice, under Applicable Law,
of the interests created by such Facility Lease and to protect the validity and
effectiveness thereof, and all Taxes, fees and other public charges payable in
connection with the filing and recordation of the Memorandum of Facility Lease
have been paid.
17
(aa) Trade Secrets and Patents.
-------------------------
(i) The leasing of the Site by the Owner Trustee, the ownership of the
Facility by the Owner Trustee and the leasing and operation of the Facility
by the Lessee, do not and will not conflict with, infringe on, or otherwise
violate any copyright, trademark, trade name, trade secret or patent rights
of any other Person.
(ii) The Lessee has all rights to all patents, patent applications,
trademarks (whether registered or not), trademark applications, trade
names, proprietary computer software, "know-how" and copyrights used or to
be used in the ordinary course of the operation of the Facility (the
"Intellectual Property Rights") that are necessary for the operation
thereof, including the right to assign the Intellectual Property Rights.
There is no judicial proceeding pending or, to the knowledge of the Lessee,
threatened, involving any claim of any infringement, misuse or
misappropriation by the Lessee or any Affiliate thereof of any patent,
trademark, trade name, copyright, license or similar intellectual property
right owned by any third party related to the Intellectual Property Rights.
(bb) Canadian Pension Plans.
----------------------
(i) All Canadian Pension Plans have been registered under the Income
Tax Act (Canada) and other applicable Canadian pension legislation. To the
Lessee's knowledge, nothing has occurred which would cause the loss of such
registration.
(ii) All contributions required to make the Canadian Pension Plans
fully funded under the Income Tax Act (Canada) and other applicable
Canadian pension legislation have been made.
(iii) All Canadian Pension Plans are in compliance with the Income Tax
Act (Canada) and other applicable Canadian pension legislation, except for
such noncompliance which would not reasonably be expected to have a
Material Adverse Effect.
(iv) The Lessee is not and has not been within the immediately
preceding five (5) years a participating employer in any negotiated cost
plan or substantially similar plan under applicable Canadian law. The
required contributions from any Subsidiary of the Lessee which is a
participating employer in any negotiated cost plan, or substantially
similar plan, under applicable Canadian law have been remitted. Each
Subsidiary of the Lessee which is a
18
participating employer in any negotiated cost plan, or substantially
similar plan, under applicable Canadian law has complied with all of
its obligations under such a plan, except such noncompliance which
would not reasonably be expected to have a Material Adverse Effect.
Section 3.3. Warranties and Representations of the Indenture Trustee. The
-------------------------------------------------------
Indenture Trustee warrants and represents that as of the Closing Date and as of
the Effective Date: (a) The Indenture Trustee is a national association duly
organized, validly existing and in good standing under the laws of the United
States of America and has the corporate power and authority to enter into and
perform its obligations under the Indenture Trustee Agreements.
(b) The Indenture Trustee Agreements have been duly authorized, have been
executed and delivered by the Indenture Trustee and constitute valid and binding
obligations of the Indenture Trustee enforceable against the Indenture Trustee
in accordance with the terms hereof and thereof, except as such terms may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and except as equitable remedies such as
specific performance may be in the discretion of the courts.
(c) The execution and delivery of the Indenture Trustee Agreements and
compliance by the Indenture Trustee with all of the provisions thereof do not
and will not contravene any law governing its banking or trust powers, or any
order of any court or governmental authority or agency applicable to or binding
on the Indenture Trustee or its articles of association or its by-laws.
(d) There are no proceedings pending or, to the knowledge of the Indenture
Trustee, threatened, and to the knowledge of the Indenture Trustee there is no
existing basis for any such proceedings, against or affecting the Indenture
Trustee in or before any court or before any governmental authority or
arbitration board or tribunal which, if adversely determined, might impair the
ability of the Indenture Trustee to perform its obligations under the Indenture
Trustee Agreements.
(e) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body governing its banking
or trust powers is required for the due execution, delivery and performance by
the Indenture Trustee of the Indenture Trustee Agreements.
19
Section 3.4. Private Offering. (a) The Owner Trustee warrants and
----------------
represents to the Lessee, the Participants and the Indenture Trustee that
neither the Owner Trustee nor any Person authorized or employed by the Owner
Trustee as agent, broker, dealer or otherwise in connection with the placement
of the Beneficial Interest or any similar Security or the Series A Notes or any
similar Security has offered any of the Beneficial Interest or any similar
Security or the Series A Notes or any similar Security for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any prospective purchaser.
(b) The Lessee warrants and represents to the Owner Trustee, the
Participants and the Indenture Trustee that:
(i) neither the Lessee nor any Person authorized or employed by the
Lessee as agent, broker or otherwise in connection with the offering or
sale of the Beneficial Interest or any similar Security has offered any of
the Beneficial Interest or any similar Security for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any prospective purchaser, other than the Owner
Participant, which was offered the Beneficial Interest at private sale for
investment and which the Lessee or such agent had reasonable grounds to
believe, and did believe, and, as to the Owner Participant, after
reasonable inquiry does believe, has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits
and risks of investment in the Beneficial Interest; and
(ii) neither the Lessee nor any Person authorized or employed by the
Lessee as agent, broker, dealer or otherwise in connection with the
offering or sale of the Series A Notes or any similar Security has offered
any of the Series A Notes or any similar Security for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any prospective purchaser, other than the Note
Purchasers and 60 other institutional investors, each of which was offered
a portion of the Series A Notes at private sale for investment and each of
which the Lessee or such agent had reasonable grounds to believe, and did
believe, and, as to the Note Purchasers, after reasonable inquiry does
believe, has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of investment
in the Series A Notes.
(c) The Owner Trustee and the Lessee agree that neither the Owner Trustee
nor the Lessee nor anyone acting on the behalf of either or both of the Owner
Trustee and the Lessee will offer
20
(i) the Beneficial Interest or any part thereof or any similar
Security for issue or sale to, or solicit any offer to acquire any of the
Beneficial Interest from anyone so as to bring the issuance and sale of the
Beneficial Interest within the provisions of Section 5 of the Securities
Act of 1933, as amended, or
(ii) the Notes or any part thereof or any similar Security for issue
or sale to, or solicit any offer to acquire any of the Notes from, anyone
so as to bring the issuance and sale of the Notes within the provisions of
Section 5 of the Securities Act of 1933, as amended.
Section 3.5. Representations And Covenants Of The Participants.
-------------------------------------------------
(a) Representations and Covenants of the Owner Participant. The Owner
------------------------------------------------------
Participant warrants and represents to the Note Purchasers, the Owner Trustee
and the Lessee that as of the Closing Date and as of the Effective Date:
(i) The Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to carry on its
present business and operations, to own or lease its Properties and to
enter into and perform its obligations under the Owner Participant
Agreements.
(ii) The Owner Participant Agreements have been duly authorized,
executed and delivered by the Owner Participant and constitute valid and
binding obligations of the Owner Participant enforceable against the Owner
Participant in accordance with the terms hereof and thereof, except as such
terms may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and except as equitable
remedies such as specific performance may be in the discretion of the
courts.
(iii) The execution and delivery by the Owner Participant of the Owner
Participant Agreements and compliance by the Owner Participant with all of
the provisions thereof do not and will not contravene any law or any order
of any court or governmental authority or agency applicable to or binding
on the Owner Participant or contravene the provisions of, or constitute a
default under, its articles of association or by-laws or any indenture,
mortgage, contract or any agreement or instrument to which the Owner
Participant is a party or by which it or any of its property may be bound
or affected.
(iv) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
21
for the due execution, delivery or performance by the Owner Participant of
the Owner Participant Agreements.
(v) The Trust Estate is free of liens and rights of others resulting
from claims against the Owner Participant not related to the transactions
contemplated by the Operative Agreements.
(b) Purchase for Investment. Each Participant represents to each other
-----------------------
Participant, the Owner Trustee and the Lessee that such Participant purchased or
is purchasing the Interest (as hereinafter defined) acquired or to be acquired
by it for the account of such Participant or for the account of one or more
pension or trust funds of which it is trustee, in each case for investment and
with no present intention of distributing or reselling such Interest or any part
thereof, but without prejudice, however, to the right of such Participant at all
times to sell or otherwise dispose of all or any part of such Interest under a
registration under the Securities Act of 1933, as amended, or under an exemption
from such registration available under such Act; provided that the disposition
of such Interest shall at all times be within its control, subject, in the case
of the Beneficial Interest, to compliance with the provisions of Section 11. If
any Participant purchased or is purchasing for the account of one or more
pension or trust funds, such Participant represents that it is acting as sole
trustee and has sole investment discretion with respect to the acquisition of
the Interest acquired or to be acquired by it pursuant to this Agreement.
The Beneficial Interest and the Series A Notes are sometimes referred to in
this Section 3.5 collectively as the "Interests" and individually as an
"Interest". ---------
--------
(c) Source of Funds. Each Participant represents that at least one of the
following statements is an accurate representation as to the source of funds
used or to be used by such Participant to make its investment pursuant to
Section 1 (the "Source"):
------
(i) the Source is an "insurance company general account" within the
meaning of United States Department of Labor Prohibited Transaction Class
Exemption ("PTCE") 95-60 (issued July 12, 1995) and there is no employee
----
benefit plan, treating as a single plan, all plans maintained by the same
employer or employee organization, with respect to which the amount of the
general account reserves and liabilities for all contracts held by or on
behalf of such plan, exceed ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement filed
with the Source's State of domicile; or
22
(ii) the Source is either (A) an insurance company pooled separate
account, within the meaning of ▇▇▇▇ ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇), ▇▇ (▇)
a bank collective investment fund, within the meaning of the PTCE 91-38
(issued July 12, 1991) and, (except as disclosed to each other Participant,
the Owner Trustee and the Lessee in writing pursuant to this paragraph
(ii)), no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment
fund; or
(iii) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of PTCE
84-14 issued March 13, 1984 (the "QPAM Exemption")), no employee benefit
--------------
plan's assets that are included in such investment fund, when combined with
the assets of all other employee benefit plans established or maintained by
the same employer or by an affiliate (within the meaning of Section V(c)(1)
of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part 1(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a Person controlling or
controlled by the QPAM (applying the definition of "control" in Section
V(e) of the QPAM Exemption) owns a 5% or more interest in such Participant
and (A) the identity of such QPAM and (B) the names of all employee benefit
plans whose assets are included in such investment fund have been disclosed
to each other Participant, the Owner Trustee and the Lessee in writing
pursuant to this paragraph (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to each other Participant, the Owner Trustee
and the Lessee in writing pursuant to this paragraph (v); or
(vi) the Source does not include assets of any employee benefit plan
(other than a plan exempt from the coverage of ERISA) and does not include
assets of any entity whose underlying assets include "plan assets" as
determined under United States Department of Labor Regulation Section
2510.3-101.
Section 3.6. Reliance by Holders of the ClO//2// Notes. It is hereby
acknowledged and understood that the holders of the ClO//2// Notes are entitled
to rely on the representations and warranties in this Section 3.
23
ARTICLE IV.
CLOSING CONDITIONS
------------------
Section 4.1. Conditions Precedent to Investment by each Participant. The
------------------------------------------------------
obligations of each Participant to make its investment pursuant hereto on the
Closing Date shall be subject to the following conditions:
(a) Execution of Operative Agreements. At or before the Closing, the
---------------------------------
Operative Agreements shall have been duly executed and delivered by the parties
thereto and shall be in full force and effect, and no default shall exist in the
performance by any party thereto (other than such Participant) of any of its
obligations thereunder.
(b) Transfer of Title, Etc. The Seller shall have executed and delivered to
----------------------
the Owner Trustee a warranty deed and ▇▇▇▇ of sale, in form and substance
satisfactory to such Participant, covering the Facility, without representation
or warranty (except as to Liens arising by, through or under the Seller) and
there shall have been delivered to such Participant's special counsel such
instruments as may be necessary or desirable to terminate all interests of the
Seller, whether as secured party or otherwise, in the Facility and the Leased
Property, other than the interests of the Lessee under the Facility Lease.
(c) [Intentionally omitted]
---------------------
(d) Survey. Not less than three Business Days prior to the Closing Date,
------
there shall have been delivered to such Participant a survey of the Site and the
Facility located on such Site prepared as of a current date by a registered
civil engineer or surveyor licensed in the State where such Site is located in
accordance with the standard detail requirements for "Class A" land title
surveys adopted by the American Land Title Association and the American Congress
on Surveying & Mapping, as revised and in effect on the date thereof, showing in
reasonable detail the locations and dimensions of such Site and the Facility
located on such Site, showing no encroachments upon such Site by adjacent
buildings or structures and no encroachments upon adjacent property showing the
location of surveyable Schedule B Exceptions to said title policies, and showing
no other defects except Permitted Encumbrances.
(e) Title Insurance. At the Closing, there shall have been delivered, with
---------------
respect to the Facility, to the Owner Trustee an American Land Title Association
Leasehold Owners--1992 title insurance policy with extended coverage and to the
Indenture Trustee an American Land Title Association Leasehold Loan Policy--1992
of title insurance, both issued by a title insurance company qualified to do
business in the
24
State where the Site for the Facility is located designated by the Lessee and
not objected to by any Participant, with respect to such Site, satisfactory in
substance and form to special counsel to such Participant, insuring the
leasehold interest of the Owner Trustee under the Site Lease for such Site for
an amount equal to the Facility Cost of the Facility located on such Site and
insuring the lien of the Indenture Trustee under the Deed of Trust covering such
Site as a holder of a first lien of record on the leasehold interest of the
Owner Trustee under the Site Lease for such Site, against loss or damage by
reason of the failure of the Deed of Trust covering such Site to create the lien
it purports to create upon the leasehold interest of the Owner Trustee in such
Site, such lender's policy to be in an amount equal to the original principal
amount of the Series A Notes issued on the Closing Date and such policies to
have no exceptions to the coverage thereof other than Permitted Encumbrances and
such other exceptions as shall be acceptable to such Participant in its sole
discretion. Such policies shall contain all endorsements required by the
Participants including, without limitation, a comprehensive endorsement and
mechanics lien coverage.
(f) Opinions of Counsel. At the Closing, such Participant shall have
-------------------
received the favorable written opinions of Stoel Rives LLP, counsel for the
Lessee, Squadron, Ellenoff, Plesent & ▇▇▇▇▇▇▇▇▇▇ LLP, special New York counsel
for the Lessee, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, local counsel for the Participants,
Morris, James, Hitchens & ▇▇▇▇▇▇▇▇, counsel for the Owner Trustee, ▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Indenture Trustee, and ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special
counsel to the Owner Participant, substantially in the respective forms set
forth in Annex II hereto.
(g) Insurance Certificate. At or before the Closing, such Participant shall
---------------------
have received certificates or other satisfactory evidence of the maintenance of
the insurance required pursuant to Section 7 of the Facility Lease covering the
Facility in the form contemplated by Section 7(c) of such Facility Lease.
(h) [Intentionally omitted]
---------------------
(i) Recording of Leases. At or before the Closing, the Site Lease covering
-------------------
the Site of the Facility and the Facility Lease covering the Facility (or
notices or memoranda thereof) and such other documents as are deemed necessary
or appropriate by such Participant shall have each been recorded or filed for
record in such public offices as may be necessary or appropriate in order to
protect the rights of the Owner Trustee thereunder and (if such Participant is a
Note Purchaser) to perfect the right, title and interest of the Indenture
Trustee in and to the Collateral.
(j) Secretary's Certificates; Good Standing Certificates; Etc. The
---------------------------------------------------------
Participants shall have received on or before the Closing Date the following,
each dated
25
the Closing Date (unless otherwise specified) and in form and substance
satisfactory to the Participants:
(i) copies of the resolutions of the board of directors of the Lessee,
approving the execution, delivery and performance by the Lessee of the
Lessee Agreements and the transactions contemplated thereby, certified as
of such Closing Date by the Secretary or an Assistant Secretary of the
Lessee;
(ii) a certificate of the Secretary or Assistant Secretary of the
Lessee certifying the names and true signatures of the officers of the
Lessee authorized to execute, deliver and perform, as applicable, the
Lessee Agreements on behalf of the Lessee;
(iii) the certificate of incorporation of the Lessee as in effect on
the Closing Date, certified by the Secretary of State of the state of
formation, and the Lessee's by-laws as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the Lessee as of the
Closing Date; and
(iv) a good standing certificate for the Lessee from the Secretary of
State of its state of incorporation, dated such Closing Date;
(k) [Intentionally Omitted]
---------------------
(l) Documents Relating to the Site. The Lessee shall deliver, or cause to
------------------------------
be delivered, to the Participants documentation with respect to the condition of
the Site, the real estate Taxes applicable to such Site and such other documents
and agreements relating to the operation of the Facility or any part thereof as
the Participants may reasonably request, in form and substance reasonably
acceptable to the Participants.
(m) Environmental Matters. A Phase I environmental site assessment of the
---------------------
Site by the Environmental Consultant shall have been conducted, at the sole cost
and expense of the Lessee, and the Participants shall have received a copy of
the Environmental Consultant's report on its Phase I environmental site
assessment, which shall be in form and substance satisfactory to the
Participants (in their sole discretion).
(n) Illegality. No change shall have occurred in Applicable Law which, in
----------
the opinion of the Participants, would make it illegal for such Participant, and
no change in circumstances shall have occurred which would otherwise make it
illegal or otherwise in contravention of guidance issued by regulatory
authorities for such Participant, to participate in the transactions to be
contemplated on the Closing Date; and no action or proceeding shall have been
instituted nor shall action before any court or Governmental Authority be
threatened which in the opinion of counsel for such Participant is not
frivolous, nor shall any order have been issued or proposed to be issued by any
court or
26
Governmental Authority, as of the Closing Date, to set aside, restrain, enjoin
or prevent the consummation of any of the transactions contemplated by this
Agreement or any of the other Operative Agreements.
(o) Proceedings Satisfactory. All proceedings taken in connection with the
------------------------
transactions contemplated hereby and all documents and papers relating thereto
shall be satisfactory to such Participant and its special counsel, and such
Participant and such special counsel shall have received copies of such
documents and papers as such Participant or such special counsel may reasonably
request in connection therewith or as a basis for such special counsel's closing
opinion, all in form and substance reasonably satisfactory to such Participant
and such special counsel.
Section 4.2. Additional Conditions Precedent to Investments by Owner
-------------------------------------------------------
Participant. The obligation of the Owner Participant to make its investment
-----------
pursuant hereto on the Closing Date shall be subject to the conditions specified
in Section 4.1 and the following additional conditions:
(a) Tax Opinion. At or before the Closing, the Owner Participant shall have
-----------
received from ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, its special counsel, a favorable opinion
in form and substance satisfactory to the Owner Participant as to the Federal
income tax consequences of the transactions contemplated hereby.
(b) Independent Appraisal. At or before the Closing, the Owner Participant
---------------------
shall have received the Appraisal.
(c) No Change in Law. On the Closing Date, there shall not have occurred a
----------------
change or proposed change in the Code or the treasury regulations thereunder, no
administrative pronouncement shall have been issued and no Supreme Court
decision shall have been rendered, in each case, which is applicable to the
transactions contemplated by the Operative Agreements and which could be adverse
to the Owner Participant and for which there has not been an adjustment to
Periodic Rent.
Section 4.3. Additional Conditions Precedent to Series A Note Purchases.
----------------------------------------------------------
The obligation of each Note Purchaser to purchase and pay for Series A Notes
pursuant hereto on the Closing Date shall be subject to the conditions specified
in Section 4.1 and the following additional conditions:
(a) Recording of Indenture. At or before the Closing, the Indenture (or a
----------------------
notice or memorandum with respect thereto) and the Deed of Trust shall have been
27
recorded or filed in all public offices as may be necessary or appropriate in
order to perfect the lien and security interest granted thereby as against
creditors of and purchasers from the Owner Trustee.
(b) Legal Investment. The Series A Notes to be issued on the Closing Date
----------------
shall on such Closing Date qualify as a legal investment for such Note Purchaser
under any laws regulating investments to which it may be subject, and such Note
Purchaser shall have received such evidence as it may reasonably request to
establish compliance with this condition.
(c) Opinion of Counsel. On the Closing Date, such Note Purchaser shall have
------------------
received the favorable written opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel
for the Note Purchasers, substantially in the form set forth in Annex II hereto.
ARTICLE V.
SPECIAL RIGHTS OF NOTE PURCHASERS
---------------------------------
Notwithstanding any provision to the contrary in this Agreement, the
Indenture or the Notes relating to the manner and place of payment, all amounts
payable to each Note Purchaser with respect to any Notes held by such Note
Purchaser or a nominee for such Note Purchaser shall be paid to the Indenture
Trustee and shall be paid by the Indenture Trustee to such Note Purchaser
(without any presentment thereof and without any notation of such payment being
made thereon) by check, duly mailed, by first class mail, postage prepaid, or
delivered to such Note Purchaser at the address for payments for such Note
Purchaser set forth in Schedule 1 hereto or, if wire transfer to a bank account
is designated for such Note Purchaser in said Schedule 1 or in a written notice
from such Note Purchaser to the Owner Trustee and the Indenture Trustee, by wire
transfer of immediately available Federal Reserve funds to the bank so
designated for credit to the account and marked for attention as so designated,
provided that such bank has facilities for the receipt of a wire transfer, or in
such other manner or to such other address in the United States as may be
designated by such Note Purchaser in a written notice from such Note Purchaser
to the Owner Trustee and the Indenture Trustee. In the case of any wire
transfer, the Indenture Trustee will transfer from the office of the Indenture
Trustee not later than 9:00 A.M., New York City Time, on each date any payment
or prepayment of principal or interest on the Notes or any other payment due to
the Note Purchasers is received, provided funds therefor have been received by
the Indenture Trustee in cash or in solvent credits acceptable to it. Each Note
Purchaser agrees that if such Note Purchaser shall sell or transfer any Note
such Note Purchaser will notify the Indenture Trustee of the name and address of
the transferee and such Note
28
Purchaser will, prior to the delivery of such Note, make a notation on such Note
of the date to which interest has been paid thereon and of the amount of any
prepayments made on account of the principal thereof.
ARTICLE VI.
[INTENTIONALLY OMITTED]
---------------------
ARTICLE VII.
GENERAL TAX INDEMNITY
---------------------
Section 7.1. Tax Indemnitee Defined. For purposes of this Section 7, "Tax
---------------------- ---
Indemnitee" means each Participant, the Owner Participant Guarantor, the Owner
----------
Trustee, Wilmington Trust Company, the Trust Estate, the Indenture Trustee both
in its individual capacity and as trustee, each of their respective Affiliates
and each of their respective successors or assigns permitted under the terms of
the Operative Agreements, including successive holders of the Notes.
Section 7.2. Taxes Indemnified.
-----------------
(a) Withholding. All payments by the Lessee to any Tax Indemnitee in
-----------
connection with the transactions contemplated by the Operative Agreements and
the ClO2 Operative Agreements shall be free and clear of, and without deduction
for, withholdings of any nature whatsoever (and at the time that the Lessee is
required to make any payment upon which any withholding is required the Lessee
shall pay an additional amount such that the net amount actually received will,
after such withholding and any incremental taxes on such amounts, equal the full
amount of the payment then due) and shall be free of expense to each Tax
Indemnitee for collection or other charges, provided, however, that no such
additional amounts shall be paid by the Lessee and the Lessee assumes no
responsibility regarding any withholdings imposed (1) on the Lessor or the Owner
Participant by reason of any transfer of the Leased Property or any interest in
the Operative Agreements by the Lessor or the Owner Participant other than a
transfer pursuant to Section 13 or 19 of the Facility Lease or any transfer
which occurs in connection with the occurrence or continuance of a Lease Default
or Lease Event of Default or (2) on the Indenture Trustee or any holder by
reason of a transfer of the Notes to a holder who is not a U.S. Person, provided
that, for the avoidance of doubt, neither the Lessor nor the Owner Participant
shall be responsible for any Taxes incurred by reason of an event described in
this clause (2) and shall receive any amounts owed to it from the
29
Indenture Trustee without diminution for any such Taxes. If, for any reason, the
Lessee is required to make any payment to a taxing authority with respect to, or
as a result of, any withholding tax imposed on any Tax Indemnitee in respect of
the transactions contemplated by the Operative Agreements and the CLO2 Operative
Agreements which withholding tax is not the responsibility of the Lessee under
this Section 7 then such Tax Indemnitee shall pay to the Lessee within 30 days
of receiving written notice thereof an amount which equals the amount paid by
the Lessee with respect to, or as a result of, such withholding tax.
(b) In General. Subject to the exclusions stated in Section 7.3, the Lessee
----------
agrees to indemnify and hold harmless each Tax Indemnitee, on an after-tax
basis, against all fees (including, without limitation, license fees and
registration fees), taxes (including, without limitation, income, gross
receipts, franchise, excise, conduct of business, ad valorem, sales, rental,
use, value added, property, transfer and stamp taxes), levies, assessments,
imports, duties, charges or withholdings of any nature, together with any and
all penalties, additions to tax, fines or interest thereon ("Taxes") imposed
-----
upon any Tax Indemnitee, the Lessee or all or any part of the Leased Property
and the CLO2 Leased Property or the Operative Agreements or the CLO2 Operative
Agreements by any federal, state or local government, political subdivision, or
taxing authority in the United States or its possessions, by any government or
taxing authority of or in a foreign country or by any international authority,
upon, with respect to or in connection with:
(i) the Leased Property, the ClO2 Leased Property or any part thereof
or interest therein;
(ii) the acquisition, financing, ownership, leasing, possession,
purchase, acceptance, rejection, condition, registration, return, use,
storage, operation, return, transfer of title, maintenance, repair,
improvement, replacement, substitution, delivery, redelivery, non-delivery,
construction, manufacture, insuring, modification, transfer, control,
occupancy, servicing, mortgaging, location, refinancing, disposition,
subleasing, repossession, abandonment, shut-down, sale or other application
or disposition of or with respect to the Leased Property, the ClO2 Leased
Property or any part thereof or interest therein;
(iii) the rental payments, receipts or earnings arising from the
Leased Property and the ClO2 Leased Property or payable pursuant to the
Facility Lease or the ClO2 Lease;
(iv) the Operative Agreements or the ClO2 Operative Agreements or
otherwise in connection with the transactions contemplated thereby;
30
(v) the payment of principal or interest or premium on or other
amounts payable with respect to the Notes or as a result of the purchase,
holding, refinancing or transfer thereof or otherwise relating to any
transaction contemplated hereby; and
(vi) without limitation of the foregoing and for the avoidance of
doubt, the ▇▇▇▇▇ River Easement, the ▇▇▇▇▇ River Agreement, the Railway
License and the County Road Documents.
Section 7.3. Taxes Excluded. The indemnity provided for in Section 7.2
shall not extend to any of the following:
(a) as to any Tax Indemnitee, Taxes imposed by any taxing authority of
or in the United States on, based on, or measured by or with respect to the
gross or net income or receipts of such Tax Indemnitee or any Affiliate
thereof (including any minimum or alternative minimum Taxes and any Taxes
on or measured by items of tax preference but excluding any sales, use,
license, property, value added (subject to clause (c) below) or rental
Taxes);
(b) as to any Tax Indemnitee, Taxes imposed by any taxing authority of
or in the United States on, based on, measured by or with respect to
capital or net worth or similar Taxes to the extent that such Taxes do not
exceed the Taxes that would have been imposed had the Tax Indemnitee not
entered into the Operative Agreements;
(c) as to any Participant, United States Federal value added taxes in
the nature of or in lieu of any income tax;
(d) as to any Tax Indemnitee, Taxes imposed with respect to the
Facility after the earliest of (1) the return of possession of the Facility
and the ClO2 Facility to the Owner Participant or the placement of such
Facility and the ClO2 Facility in storage at the request of the Owner
Participant, in either case pursuant to Section 16 of the Facility Lease
covering the Facility and the ClO2 Lease, (2) the termination of the Term
under the ClO2 Lease pursuant to Section 19(f) of the Facility Lease with
respect to the Facility and the Term under the ClO2 Lease pursuant to
Section 14(c) of the ClO2 Participation Agreement, or (3) the discharge in
full of the Lessee's obligation to pay the Termination Value or the
Casualty Value and all other amounts due, if any, under Section 13 of the
Facility Lease and Section 13 of the ClO2 Lease; provided, that the
exclusion set forth in this clause (d) shall not apply to Taxes to the
extent such Taxes relate to events occurring or matters arising prior to or
simultaneously with such time
31
(including, without limitation, Taxes imposed after such time by reason of
ownership of the Facility prior to such time);
(e) as to any Tax Indemnitee, Taxes to the extent such Taxes arise directly
out of or are directly caused by any breach by such Tax Indemnitee of any of its
representations, warranties or covenants in any of the Operative Agreements, or
the gross negligence or willful misconduct of such Tax Indemnitee;
(f) as to any Tax Indemnitee, any Taxes to the extent such Taxes result
from the failure of such Tax Indemnitee to file tax returns, reports or
statements properly and on a timely basis (unless such failure is related to the
failure of the Lessee to perform properly and on a timely basis its obligations
under Section 7.8);
(g) as to any Tax Indemnitee, Taxes which become payable as a result of a
sale, assignment, transfer or other disposition (whether voluntary or
involuntary) by such Tax Indemnitee of all or any portion of its interest in the
Leased Property or any part thereof, the Trust Estate or any of the Operative
Agreements or rights created thereunder, including, without limitation, a
revocation of the Trust Agreement, other than a disposition which occurs as the
result of the exercise of remedies for a Lease Event of Default, any disposition
which occurs in connection with the occurrence and continuance of a Lease Event
of Default or a purchase of the Facility pursuant to the Facility Lease;
(h) as to any Tax Indemnitee, Taxes, to the extent such Taxes imposed by
any jurisdiction would not have been imposed on such Tax Indemnitee but for
activities of such Tax Indemnitee in such jurisdiction unrelated to the
transactions contemplated by the Operative Agreements and the ClO2 Operative
Agreements;
(i) as to the Indenture Trustee or the holder of a Note (or any successor
indebtedness), any Tax in the nature of an intangible or similar Tax imposed
upon or with respect to the value of its interest in the Notes (or any successor
indebtedness) by any taxing authority unless such Tax would not have been
imposed on the value of any other Notes held by the Indenture Trustee or the
holder of a Note;
(j) as to the Owner Trustee or the Indenture Trustee, Taxes which are based
on or measured by its fees or compensation;
32
(k) as to any Tax Indemnitee, penalties, interest or additions to tax
(including those related to estimated tax payments) to the extent imposed
as a result of Taxes which are excluded from indemnification hereunder; and
(l) as to any Tax Indemnitee, any foreign Taxes imposed with respect
to the Facility or any portion or part thereof, or the transactions
contemplated by the Operative Agreements or the ClO2 Operative Agreements,
unless such Taxes result from the use, registration, or location of the
Facility or the ClO2 Facility or any portion or part thereof, or the
incorporation, organization or location of a user, lessee or assignee
(whether or not in possession) of the Facility or the ClO2 Facility or any
portion or part thereof (other than the Lessor, the Owner Participant or
any Affiliate or assignee thereof), in, or any payment in respect thereof
being made by the Lessee or any Affiliate thereof from, the foreign
jurisdiction imposing such Taxes.
Section 7.4. All Tax Obligations in this Section, Etc. Notwithstanding any
----------------------------------------
other provision anywhere contained in the Operative Agreements, it is understood
that all of the Lessee's obligations with respect to Taxes are set forth in this
Section 7 and in the Tax Indemnity Agreement.
Section 7.5. Payments to Lessee. (a) If any Tax Indemnitee shall realize a
------------------
Tax benefit (net of any Tax detriment not otherwise paid or indemnified against
by the Lessee hereunder) as a result of any Taxes paid or indemnified against by
the Lessee under this Section 7 (whether by way of deduction, credit, allocation
or apportionment or otherwise), such Tax Indemnitee shall pay to the Lessee an
amount equal to the amount of such Tax benefit, increased by the Tax
Indemnitee's additional saved Taxes attributable to the payment being made to
the Lessee hereunder.
(b) Upon receipt by a Tax Indemnitee of a refund or credit of all or part
of any Taxes paid or indemnified against by the Lessee, such Tax Indemnitee
shall pay to the Lessee an amount equal to the amount of such refund plus any
interest received by or credited to such Tax Indemnitee with respect to such
refund increased or decreased, as the case may be, by the Tax Indemnitee's net
additional or saved taxes attributable to the receipt of such amounts from the
taxing authority and the payment being made to the Lessee hereunder.
(c) If at the time a payment described in Section 7.5(a) or (b) hereof
shall be due to the Lessee a Lease Default or Lease Event of Default shall have
occurred and be continuing, such amount shall not be payable until such Lease
Default or Lease Event of Default shall have been cured.
33
(d) The aggregate of all amounts paid by a Tax Indemnitee to the Lessee
pursuant to this Section 7.5 shall in no case exceed the sum of all amounts paid
to such Tax Indemnitee by the Lessee, other than contest costs, plus amounts
payable to the Lessee under clause (b) of this Section 7.5.
Section 7.6. Procedures. The Lessee will endeavor in good faith to
----------
determine and timely pay to the applicable authority all Taxes which it will be
obligated to indemnify under this Section 7 except those that the Lessee intends
to contest pursuant to Section 7.7. Any amount payable to a Tax Indemnitee
pursuant to Section 7.2 shall be paid within 30 days after receipt of a written
demand therefor from such Tax Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable, provided that such amount need not be paid prior to
the later of (i) the date on which such Taxes are paid or payable (including
without limitation by a reduction of a refund with respect to unindemnified
Taxes), or (ii) in the case of amounts which are being contested pursuant to
Section 7.7 hereof, the time such contest (including all appeals) is finally
resolved. Any amount payable to the Lessee pursuant to Section 7.5 shall be paid
promptly after a Tax Indemnitee realizes a net tax benefit or receives a refund
giving rise to a payment under Section 7.5, and shall be accompanied by a
written statement by such Tax Indemnitee setting forth in reasonable detail the
basis for computing the amount of such payment. Such statement shall be final,
binding and conclusive upon the parties unless within 15 days following the
Lessee's receipt of any computation from such Tax Indemnitee, the Lessee
requests that an independent nationally recognized accounting firm selected by
such Tax Indemnitee and reasonably acceptable to the Lessee determine whether
such computations of such Tax Indemnitee are correct. Such accounting firm shall
be requested to make the determination contemplated by this Section 7.6 within
30 days of its selection. In the event such accounting firm shall determine that
such computations are incorrect, then such firm shall determine what it believes
to be the correct computations. The Tax Indemnitee shall cooperate with such
accounting firm and supply it with all information necessary to permit it to
accomplish such determination (other than income tax returns). The computations
of such accounting firm shall be final, binding and conclusive upon the parties,
and the Lessee shall have no right to inspect the books, records or tax returns
of any Tax Indemnitee to verify such computation or for any other purpose. All
fees and expenses of the accounting firm payable under this Section 7.6 shall be
borne by the Lessee; provided, however, that such fees and expenses will be paid
by the Tax Indemnitee if the verification results in an adjustment in the
Lessee's favor of ten percent or more of the indemnity payment or payments
computed by the Tax Indemnitee.
34
Section 7.7 Contest. If a written claim is made against a Tax Indemnitee
-------
for Taxes with respect to which the Lessee may be liable for indemnity
hereunder, the Tax Indemnitee shall give the Lessee prompt notice in writing of
such claim (and in any event within 30 days after its receipt) and shall
promptly furnish the Lessee with copies of the claim and all other writings
received from the taxing authority relating to the claim; provided however, that
the failure of such Tax Indemnitee timely to provide such written notice shall
not affect the Lessee's obligations under this except to the extent
that the same precludes the Lessee from contesting such Taxes.
The Tax Indemnitee shall not pay such claim prior to the 30 days after providing
the Lessee with such written notice, unless required to do so by law or unless
deferral of payment would cause adverse consequences to the Tax Indemnitee. The
Tax Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if requested in writing by the Lessee, contest (including pursuing all
appeals permitted hereby) in the name of the Tax Indemnitee (or, if requested by
the Lessee and permissible as a matter of law, in the name of the Lessee or an
Affiliate), or shall permit or, at such Tax Indemnitee's election, require the
Lessee to contest in either the name of the Lessee or an Affiliate or with the
Tax Indemnitee's consent (not to be unreasonably withheld), in the name of the
Tax Indemnitee the validity, applicability or amount of such Taxes by,
(a) resisting payment thereof if practical;
(b) not paying the same except under protest if protest is necessary
and proper;
(c) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; or
(d) taking such other reasonable action as is reasonably requested by
the Lessee from time to time.
provided, however, that if the contest is carried on in the name of the Lessee
-----------------
or an Affiliate, or is being brought by the Lessee in the name of the Tax
Indemnitee, such contest shall be undertaken by the Lessee, at the Lessee's
expense and at no after-tax cost to the Tax Indemnitee, unless at such time the
Tax Indemnitee determines in its reasonable good faith judgment that either (x)
such claim is not severable from other Taxes in dispute before the same taxing
authority without adversely affecting the Tax Indemnitee with respect to such
other Taxes or the resolution of the dispute or (y) based upon the Lessee's
conduct of such contest, the Lessee's continued control of such contest is
reasonably likely to have a material adverse impact on the Tax Indemnitee in
which case the Tax Indemnitee shall conduct such contest.
35
In no event shall any Tax Indemnitee be required or the Lessee be permitted
to contest any Taxes for which the Lessee is obligated to indemnify pursuant to
this Section 7 unless: (1) such Lessee shall have acknowledged its liability to
such Tax Indemnitee for an indemnity payment pursuant to this Section 7 as a
result of such claim if and to the extent such Tax Indemnitee or the Lessee, as
the case may be, shall not prevail in the contest of such claim provided,
however, that such acknowledgment shall be of no force or effect to the extent
that such contest is resolved on a basis that clearly demonstrates that, without
such acknowledgment pursuant the terms of this Agreement, the Lessee would not
otherwise be liable to the Tax Indemnitee for the Tax so contested; (2) such Tax
Indemnitee shall have received the opinion of independent tax counsel selected
by such Tax Indemnitee and satisfactory to the Lessee furnished at Lessee's sole
expense, to the effect that a reasonable basis exists for contesting such claim
or, in the event of an appeal, that it is more likely than not that an appellate
court will reverse or substantially modify the adverse determination (and
provided that no appeal shall be required to the United States Supreme Court);
(3) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no
after-tax costs to such Tax Indemnitee) all reasonable costs and expenses that
such Tax Indemnitee actually incurs in connection with contesting such claim
(including, without limitation, all costs, expenses, reasonable legal and
accounting fees, disbursements, penalties, interest and additions to the Taxes);
(4) no Lease Default or Lease Event of Default shall have occurred and shall
have been continuing; (5) such Tax Indemnitee shall have determined that the
action to be taken will not result in any substantial danger of sale, forfeiture
or loss of, or the creation of any Lien (except if such Lessee shall have
adequately bonded such Lien or otherwise made provision to protect the interests
of such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) on the Leased Property or ClO2 Leased Property or any portion
thereof or any interest therein; (6) the amount of such claims alone, or, if the
subject matter thereof shall be of a continuing or recurring nature, when
aggregated with identical potential claims with respect to this transaction
shall be at least $25,000; (7) if such contest shall be conducted in a manner
requiring the payment of the claim, the Lessee shall have paid the amount
required (and at no after-tax costs to the Tax Indemnitee); and (8) such claim
or liability does not involve the possibility of criminal sanctions or liability
to such Tax Indemnitee. The Lessee shall cooperate with the Tax Indemnitee with
respect to any contest controlled and conducted by the Tax Indemnitee and the
Tax Indemnitee shall consult with the Lessee regarding the conduct of such
contest and in furtherance of the foregoing, the Lessee shall have the right to
attend any proceeding to the extent relating to matters for which it is
obligated to indemnify hereunder but shall not be permitted to actively
participate in any discussion. The Tax Indemnitee shall not discriminate against
any proposed adjustment due to its indemnified nature as compared with other
proposed adjustments involving potential tax liability of the Tax Indemnitee and
shall not, without the written consent of the Lessee, settle such
36
proposed adjustment. The Tax Indemnitee shall cooperate with the Lessee with
respect to any contest controlled and conducted by the Lessee and the Lessee
shall consult with the Tax Indemnitee regarding the conduct of such contest. The
Tax Indemnitee shall have the right to attend any proceeding to the extent
relating to matters for which it may be indemnified hereunder but shall not be
permitted to actively participate in any discussion.
Notwithstanding anything contained in this Section 7.7 to the contrary, no
Tax Indemnitee shall be required to contest any claim if the subject matter
thereof shall be of a continuing or recurring nature and shall have previously
been decided adversely to the Tax Indemnitee pursuant to the contest provisions
of this Section 7.7 unless there shall have been a change in the law (including,
without limitation, amendments to statutes or regulations, administrative
rulings or court decisions) enacted, promulgated or effective after such claim
shall have been so previously decided, and such Tax Indemnitee shall have
received an opinion of independent tax counsel selected by such Tax Indemnitee
and reasonably satisfactory to Lessee, furnished at the Lessee's sole expense,
to the effect that such change is favorable to the position which such Tax
Indemnitee or the Lessee, as the case may be, had asserted in such previous
contest and as a result of such change, there is a reasonable basis to contest
such claim.
Section 7.8. Reports. In the event any reports with respect to Taxes are
-------
required to be made, the Lessee will either prepare and file such reports (and
in the case of reports which are required to be filed with respect to the
Facility, such reports shall be prepared and filed in such manner as to show as
required the interests of each Tax Indemnitee in such Facility) or, if it shall
not be permitted to file the same, it will notify each Tax Indemnitee of such
reporting requirements, prepare such reports in such manner as shall be
satisfactory to each Tax Indemnitee and deliver the same to each Tax Indemnitee
within a reasonable period prior to the date the same is to be filed. The
Lessee's obligations pursuant to the previous sentence shall be subject to
Lessee's knowledge (having made good faith and reasonable efforts to inform
itself) of the necessary reports; provided, however that a Tax Indemnitee's
failure to file any report as a result of the Lessee's failure to provide such
report shall not subject the Tax Indemnitee to the exclusion in Section 7.3 (f)
hereof. The Lessee shall provide such information as the Owner Participant or
the Owner Trustee may reasonably require from the Lessee to enable the Owner
Participant and the Owner Trustee to fulfill their respective tax filing, tax
audit, and tax litigation obligations.
Section 7.9. Survival. The provisions of this Section 7 shall continue in
--------
full force and effect, notwithstanding the expiration or termination of any
Operative Agreement, until all obligations hereunder have been met and all
liabilities hereunder paid in full.
37
ARTICLE VIII.
INDEMNITIES OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANT
----------------------------------------------------------
Each of Wilmington Trust Company and the Owner Participant (referred to in
this Section as the "Indemnitors") hereby severally agrees for the benefit of
-----------
the other Indemnitor, the Indenture Trustee and the Note Purchasers (referred to
in this Section as the "Indemnitees") that at all times the Trust Estate shall
-----------
be free of any Lien arising as a result of claims against such Indemnitor not
related to the transactions contemplated by the Operative Agreements and to such
Indemnitor's interest in the Trust Estate (except Permitted Encumbrances other
than Lessor's Liens attributable to such Indemnitor) and that such Indemnitor
will at its own cost and expense promptly take such action as may be necessary
duly to discharge any such Lien, provided that no such Lien need be discharged
so long as it is being contested by Permitted Contest. Each Indemnitor further
agrees to indemnify and hold harmless the Indemnitees from and against any costs
or expenses (including legal fees and expenses) incurred, in each case, as a
result of the imposition or enforcement of any such Lien.
Each Indemnitor hereby severally agrees for the benefit of the Lessee that
at all times the Leased Property under the Facility Lease shall be free of any
Lien which impairs the right, title or interest of the Lessee under the Facility
Lease and which arises as a result of claims against such Indemnitor not related
to the transactions contemplated by the Operative Agreements and to such
Indemnitor's interest in such Leased Property, except Permitted Encumbrances
(other than Lessor's Liens attributable to such Indemnitor), and that such
Indemnitor will at its own cost and expense promptly take such action as may be
necessary duly to discharge any such Lien, provided that no such Lien need be
discharged so long as it is being contested by Permitted Contest; and such
Indemnitor further agrees to indemnify and hold harmless the Lessee from and
against any costs or expenses (including legal fees and expenses) incurred, in
each case, as a result of the imposition or enforcement of any such Lien which
impairs the right, title or interest of the Lessee under the Facility Lease,
except Permitted Encumbrances (other than Lessor's Liens attributable to such
Indemnitor).
The agreements of Wilmington Trust Company in this Section 8 are made in
its individual capacity and not as Owner Trustee, notwithstanding the provisions
of Section 14.8(b) or any similar provision of any other Operative Agreement.
38
ARTICLE IX.
INDEMNIFICATION
---------------
Section 9.1. General Indemnity. The Lessee hereby agrees, whether or not
-----------------
any of the transactions contemplated hereby shall be consummated, to assume
liability for, and does hereby agree to indemnify, protect, defend, save and
keep harmless, on an after tax basis and at no after tax cost to the Indemnified
Party, each Indemnified Party from and against any and all liabilities,
obligations, losses, damages, Environmental Claims, penalties, claims (including
claims by any employee of the Lessee or the ClO2 Lessee or the Seller or any of
their respective contractors), actions, suits and related costs, expenses and
disbursements, including reasonable legal fees and expenses, of whatsoever kind
and nature (for purposes of this Section 9 collectively called "Expenses"),
imposed on, asserted against or incurred by any Indemnified Party as a result of
claims threatened or asserted against such Indemnified Party in any way relating
to or arising out of (i) this Agreement and the other Operative Agreements,
including the Notes and the offering or sale thereof and the ClO2 Operative
Agreements, (ii) the construction, installation, ownership, delivery, lease,
sublease, possession, use, operations or condition of the Leased Property and
the ClO2 Leased Property under the Facility Lease and the ClO2 Lease (including,
without limitation, latent and other defects, whether or not discoverable by the
Indemnified Party or the Lessee, and any claim for patent, trademark or
copyright infringement and any claim arising under the strict liability doctrine
in tort) the ClO2 Facility or the ClO2 Site, (iii) the sale or other disposition
of the Leased Property under the Facility Lease, the ClO2 Leased Property under
the ClO2 Lease or any portion thereof pursuant to Section 8, 13, or 15 or 19 of
such Facility Lease, Section 8, 13, or 15 of the ClO2 Lease or Section 14 of the
ClO2 Participation Agreement, or (iv) without limitation of the foregoing and
for the avoidance of doubt, the ▇▇▇▇▇ River Easement, the ▇▇▇▇▇ River Agreement,
the Railway License and the County Road Documents, except only that the Lessee
shall not be required to indemnify any Indemnified Party pursuant to this
Section 9 for (A) any Taxes or other impositions, and (B) Expenses resulting
from the willful misconduct, gross negligence or willful breach of contract of
such Indemnified Party. If any Indemnified Party shall have knowledge of any
claim or liability hereby indemnified against it shall give prompt written
notice thereof to the Lessee; provided, however, that the failure of such
Indemnified Party to give such notice shall not relieve the Lessee of any of its
obligations hereunder except to the extent the same causes the Lessee's
indemnification obligations to exceed the obligations of the Lessee had the
Lessee received such notice.
Section 9.2. Payments, Survival and other Provisions. All amounts payable
---------------------------------------
by the Lessee pursuant to this Section 9 shall be payable directly to the
parties
39
entitled to indemnification. All the indemnities contained in this
Section 9 shall continue in full force and effect notwithstanding the expiration
or other termination of this Agreement, the Facility Lease or any other
Operative Agreement and are expressly made for the benefit of, and shall be
enforceable by, each Indemnified Party. The Lessee's obligations under this
Section 9 shall be that of primary obligor irrespective of whether the
Indemnified Party shall also be indemnified with respect to the same matter
under any other agreement by any other Person.
Section 9.3. No Guarantee of Residual Value or Notes. The indemnities and
---------------------------------------
assumptions of liabilities set forth in this Section 9 do not guarantee a
residual value of the Facility or guarantee the payment of the Notes; provided
that the foregoing shall not limit the provisions of Section 12(b) of the
Facility Lease.
ARTICLE X.
TRANSACTION ECONOMICS
---------------------
The Periodic Rent, Casualty Value, Termination Value and Early Purchase
Price for the Facility being purchased on the Closing Date shall be as set forth
in the form of Facility Lease attached hereto as Exhibit C.
ARTICLE XI.
RESTRICTIONS ON TRANSFER OF BENEFICIAL INTEREST
-----------------------------------------------
The Owner Participant agrees that it shall not sell, convey, assign,
pledge, mortgage encumber or otherwise transfer any of its Beneficial Interest
and further agrees that the obligations under the Owner Participant Guaranty
shall not be transferred, in each case prior to the expiration or earlier
termination of the Term of the Facility Lease, unless:
(a) The Person to whom such transfer is to be made (a "Transferee") is not
----------
subject at the time of the transfer to an Insolvency Proceeding and is an
"affiliated company" or a "qualified investor" or any other Person agreeable to
each Note Purchaser and the Lessee as evidenced by their respective prior
written consents delivered to the Owner Participant or Owner Participant
Guarantor, as applicable. The term "affiliated company" shall mean any company
(the "Parent") owning, directly or indirectly, not less than 80% of the Voting
------
Stock of the Owner Participant or the Owner Participant Guarantor, any company
(the "Holding Company") owning, directly or indirectly, not less
---------------
40
than 80% of the Voting Stock of the Parent, and any company not less than 80% of
the Voting Stock of which is owned, directly or indirectly, by the Holding
Company, the Parent or such Owner Participant or Owner Participant Guarantor or
any entity with which such Owner Participant or Owner Participant Guarantor
merges or consolidates or which acquires substantially all of its assets. The
term "qualified investor" means any Person existing under the laws of the United
States of America or any jurisdiction thereof which is an institutional
investor, which, so long as no Lease Default under clause (i), (ii), (vi),
(vii), (viii) or (ix) of Section 15(a) of the Facility Lease or any Lease Event
of Default shall have occurred and be continuing, is not a Disqualified Assignee
(as defined below), and which (in the case of any banking institution or
insurance company) has capital, surplus and undivided profits (or the
equivalent) of at least U.S.$50,000,000 or (in the case of any other transferee)
has a net worth of at least U.S.$50,000,000; provided that, such Transferee may
have a capital, surplus and undivided profits or net worth, as the case may be,
of less than U.S.$50,000,000 if all of the capital stock and other Securities of
such Transferee are owned by a Person that would constitute a permitted
transferee hereunder and such Person guarantees, or, in the case of a transfer
by the Owner Participant where the Owner Participant Guarantor remains the same
Person as before such transfer, such Person continues to guaranty the
obligations of such transferee of the Owner Participant, under the Operative
Agreements by instrument in substantially the form of the Owner Participant
Guaranty or otherwise satisfactory to the Owner Trustee, each other Participant
and the Lessee. "Disqualified Assignee" means a Person engaged, as a material
part of its business, in activities in the forest products industry, excluding a
Person engaged in such activities solely as a result of passive investments
(including the temporary ownership of manufacturing facilities as a result of
the exercise of such Person's remedies in connection with such investments).
(b) The Indenture Trustee, the Note Purchasers and the Lessee shall have
received 20 days' prior written notice of such transfer specifying the name and
address of any proposed transferee and such additional information as shall be
necessary to determine whether the proposed transfer satisfies the requirements
of this Section 11.
(c) Such Transferee enters into an agreement or agreements in form and
substance reasonably satisfactory to the Lessee, the Owner Trustee and the Note
Purchasers whereby, in the case of a transfer by the Owner Participant, such
Transferee confirms that it shall be deemed a party to this Agreement, and each
other Owner Participant Agreement, and in the case of a transfer by the Owner
Participant Guarantor, such Transferee confirms that it is party to the Owner
Participant Guaranty, and agrees to be bound by all the terms of, and to
undertake all of the obligations and liabilities of the transferring Owner
Participant or Owner Participant Guarantor, as applicable, contained in, the
Owner Participant Agreements or the Owner Participant Guaranty, if applicable,
to
41
the extent of the interest transferred and in which the Transferee shall make
representations and warranties comparable to those of the Owner Participant or
Owner Participant Guarantor contained herein and in the other Owner Participant
Agreements or, as applicable, in the Owner Participant Guaranty.
(d) An opinion of counsel of the Transferee (which counsel shall be
reasonably acceptable to the Lessee and the Note Purchasers), confirming (i) the
existence, power and authority of, and due authorization, execution and delivery
of all relevant documentation by, the Transferee (with appropriate reliance on
certificates of corporate officers or public officials as to matters of fact),
and (ii) that each agreement referred to in subparagraph (c) above is the legal,
valid and binding obligation of the Transferee, enforceable against the
Transferee in accordance with the terms thereof (subject to customary
qualifications as to bankruptcy and equitable principles), shall be provided,
prior to such transfer, to the Lessee, the Note Purchasers and the Indenture
Trustee, which opinion shall be in form and substance reasonably satisfactory to
each of them.
(e) After giving effect to such transfer, there shall not be more than two
Owner Participants in the aggregate.
(f) All fees, expenses and charges of the parties hereto (including,
without limitation, legal fees and expenses of special counsel) incurred in
connection with each transfer of such Beneficial Interest shall be paid by the
Owner Participant or the Owner Participant Guarantor, as applicable.
(g) Such transfer does not involve the use of an amount which constitutes
assets of an employee benefit plan (other than a governmental plan exempt from
the coverage of under ERISA) or such Transferee makes the representation
regarding the source of funds contained in Section 3.5(c) hereof.
(h) After giving effect to such transfer, no Indenture Default attributable
to any Owner Participant, any Owner Participant Guarantor or the Owner Trustee
shall have occurred and be continuing.
(i) The Owner Participant or Owner Participant Guarantor, as applicable,
shall deliver to the Lessee, the Owner Trustee, the Note Purchasers and the
Indenture Trustee, an Officer's Certificate certifying as to compliance with the
transfer requirements contained herein.
(j) Any such purported transfer of Beneficial Interest under this Agreement
shall be deemed to be null and void unless a similar transfer of the same
42
percentage interest to the same transferee is made simultaneously under and as
defined in the ClO2 Participation Agreement.
Upon any such transfer, (i) except as the context otherwise requires, such
Transferee shall be deemed the "Owner Participant" or "Owner Participant
Guarantor", as the case may be, for all purposes, and shall enjoy the rights and
privileges and perform the obligations of the Owner Participant or Owner
Participant Guarantor, as applicable, to the extent of the interest transferred
hereunder and under each other Owner Participant Agreement, and, except as the
context otherwise requires, each reference in this Agreement and each other
Operative Agreement to the "Owner Participant" or "Owner Participant Guarantor",
as the case may be, shall thereafter be deemed to include such Transferee for
all purposes to the extent of the interest transferred, (ii) the transferor
shall be released from all obligations hereunder and under each other Owner
Participant Agreement and, if applicable, under the Owner Participant Guaranty,
or by which such transferor is bound to the extent such obligations are
expressly assumed by a Transferee, and (iii) in the event of a transfer by the
Owner Participant to a Transferee that is a qualified investor (whether or not
an affiliated company) having capital surplus and undivided profits or net
worth, as the case may be, of $50,000,000, any Owner Participant Guarantor prior
to such transfer shall be released from all obligations under the Owner
Participant Guaranty, and under the other Operative Agreements; and provided,
further, that in no event shall any such transfer or assignment waive or release
the transferor, or the Owner Participant Guarantor prior to transfer in the case
referred to in clause (iii) of this paragraph, from any liability on account of
any breach of any of its representations, warranties, covenants or obligations
set forth in the Owner Participant Agreements or the Owner Participant Guaranty,
if applicable, or for any fraudulent or willful misconduct. Any transfer or
assignment of the Beneficial Interest in violation of this Section 11 shall be
void and of no effect. No consent of the Lessee otherwise required hereunder
shall be required if any Lease Event of Default shall have occurred and be
continuing. Notwithstanding any transfer, the transferor Owner Participant or
Owner Participant Guarantor, as the case may be, shall be entitled to all
benefits accrued and all rights vested prior to such transfer, including,
without limitation, rights to indemnification under any Operative Agreements and
also shall remain liable to the extent provided in the Operative Agreements, for
facts, circumstances, acts or omissions that occurred prior to or
contemporaneously with such transfer.
Notwithstanding anything to the contrary contained herein, each of the
Owner Participant and Owner Participant Guarantor shall not mortgage, pledge,
assign or otherwise hypothecate the Beneficial Interest, or any portion thereof,
as collateral security.
43
ARTICLE XII.
LESSEE ASSUMPTION OF NOTES
--------------------------
Section 12.1. Assumption. (a) In the event that the Lessee shall have
----------
elected to assume the rights and obligations of the Owner Trustee under the
Indenture and the Notes in connection with the purchase by the Lessee of the
Facility and termination of the Facility Lease pursuant to Section 19(f)
thereof, the Lessee shall so notify the Indenture Trustee, each holder of a Note
and each holder of a ClO2 Note and, so long as no Lease Default or Lease Event
of Default shall have occurred and be continuing on the purchase date and date
of assumption (the "Assumption Date") specified in such notice, which date shall
---------------
be not less than 30 nor more than 60 days after the date of the Indenture
Trustee's receipt of such notice, upon delivery to the Indenture Trustee of the
documents referred to below (provided, however, that such assumption shall be
-------- -------
null and void unless the ClO2 Lessee has simultaneously made the corresponding
assumption under the ClO2 Operative Documents), the Lessee shall assume all of
the rights and obligations of the Owner Trustee under the Indenture and under
the Notes then outstanding and in connection therewith (and as a condition
thereto) Lessee shall satisfy, or cause to be satisfied the following conditions
precedent:
(i) (A) Lessee shall enter into an instrument of assumption (the
"Assumption Agreement") pursuant to which the Lessee irrevocably and
-------------------- unconditionally assumes and undertakes, with full
recourse to the Lessee, the Owner Trustee's obligations (the "Assumed
-------
Obligations") with respect to principal, interest and all other amounts
-----------
(including, without limitation, the Make-Whole Amount) payable to the
holders of the Notes or the Indenture Trustee under the Notes, the
Indenture and the Participation Agreement and which incorporates therein
events of default substantially similar in scope and effect to those set
forth in the Facility Lease (and eliminating those no longer relevant with
respect to the Owner Participant) and covenants substantially similar to
the covenants of the Lessee under the Facility Lease, and (B) if requested
by a Majority in Interest, the Lessee shall also issue, and the Indenture
Trustee shall also authenticate, new Notes evidencing such assumption and
the full recourse nature of the Lessee's obligations thereunder;
(ii) Lessee shall also enter into a deed of trust, given by the
Lessee, in form and substance satisfactory to the holders of the Notes and
the holders of the ClO2 Notes, covering the Site and the Facility and such
other instruments and documents (including, without limitation, Uniform
Commercial Code financing statements) as may be necessary (or reasonably
requested by a
44
Majority in Interest, the Required Lenders or the Indenture Trustee) for
the security interest of the Indenture Trustee in the Facility and in the
other rights, property and interests included in the Indenture Estate to
continue to be (or in the case of such deed of trust to be) perfected and
duly recorded in all places necessary or, in the reasonable opinion of a
Majority in Interest or the Required Lenders, advisable;
(iii) Lessee shall deliver to each of the holders of the Notes and
each of the holders of the ClO2 Notes an insurance report dated the
Assumption Date of an independent insurance broker and the certificates of
insurance, each in form and substance reasonably satisfactory to the
holders of the Notes and the Indenture Trustee as to the due compliance as
of the Assumption Date with the terms of Section 7 of the Facility Lease
(as incorporated into the Assumption Agreement and as relates to the
holders of the Notes, the holders of the ClO2 Notes and the Indenture
Trustee);
(iv) Lessee shall deliver to each of the holders of the Notes and each
of the holders of the ClO2 Notes evidence that as of the Assumption Date
the Lessee has good title to the Facility and the Site free and clear of
all Liens other than the Lien of, and the security interest created by, the
Indenture, the deed of trust referred to in clause (ii) above, the Facility
Lease and other Permitted Encumbrances (other than Lessor's Liens);
(v) Lessee shall deliver to each of the holders of the Notes and each
of the holders of the ClO2 Notes a certificate from the Lessee that no
Lease Default or Lease Event of Default shall have occurred and be
continuing as of the Assumption Date;
(vi) Lessee shall deliver to each of the holders of the Notes and each
of the holders of the ClO2 Notes an opinion (or opinions) of counsel to the
Lessee reasonably satisfactory to the holders of the Notes, the holders of
the ClO2 Notes and the Indenture Trustee in form and substance reasonably
satisfactory to the holders of the Notes, the holders of the ClO2 Notes and
the Indenture Trustee, addressed to the Note Purchasers, the holders of the
ClO2 Notes and the Indenture Trustee and dated the Assumption Date, with
customary qualifications, to the effect that (A) the execution, delivery
and performance of the Assumption Agreement, the deed of trust referred to
in paragraph (ii) of this Section 12.1 and all other instruments and
documents executed and delivered by the Lessee in connection with the
assumption of the obligations contemplated by this Section 12.1 or
otherwise necessary for the continued perfection of the security interests
referred to in clause (ii) above have, in each instance, been duly
45
authorized by all necessary action, and duly executed and delivered; (B)
the Assumption Agreement, such deed of trust and all such other documents
and instruments referred to above are legal, valid and binding obligations
of the Lessee enforceable in accordance with their terms (with customary
qualifications); (C) execution and delivery by the Lessee of the Assumption
Agreement and all such other documents and instruments referred to above do
not and will not contravene any provision of the Lessee's certificate of
incorporation or by-laws or any law or regulation applicable to the Lessee
or any agreement, mortgage or instrument known to such counsel to which the
Lessee is a party or by which the Lessee is bound; (D) after giving effect
to the transactions contemplated by the Assumption Agreement, the
respective Liens of the Indenture and each such deed of trust continue to
constitute valid and duly perfected Liens on the Collateral described
therein; and (E) to such further effect with respect to such other matters
(including, without limitation, any matters included in the opinion
delivered on the Closing Date pursuant to Section 4.1(f) of this Agreement,
to the extent such matters are relevant at the time of the assumption
contemplated by this Section 12.1) as a Majority in Interest or the
Required Lenders may reasonably request;
(vii) Lessee shall deliver to each holder of the Notes and each holder
of the ClO2 Notes such other documentation or evidence reasonably requested
by a Majority in Interest or the Required Lenders (in form and substance
reasonably satisfactory to the holders of the Notes, the holders of the
ClO2 Notes and the Indenture Trustee), including amendments to the
Operative Agreements, to give effect to the foregoing and in order to
establish the authority of the Lessee, the Owner Trustee, the Indenture
Trustee and the Owner Participant to consummate the transactions
contemplated by the assumption and the taking of all corporate proceedings
in connection therewith.
(b) It shall be a condition of any transaction contemplated by Section
12.1(a) that such instruments as the Owner Trustee or the Owner Participant may
reasonably request, prepared at the sole cost and expense of the Lessee,
evidencing the release and discharge of the Owner Trustee from any liability on
or with respect to the Notes or the Indenture or the Deed of Trust (other than
liabilities accrued prior to the date of the assumption) and discharging the
Lien of the Indenture Trustee upon the purchase price of the Facility being
distributed to the Owner Trustee, shall be delivered to the Owner Trustee.
Section 12.2. No Other Assumption; Payment of Expenses. Neither the Lessee
----------------------------------------
nor any other Person may assume the Notes except pursuant to and in accordance
with the provisions of Section 12.1. Lessee shall pay all reasonable costs and
expenses
46
(including counsel's reasonable fees and disbursements) of the Owner Trustee,
the Participants, the holders of the ClO2 Notes and the Indenture Trustee in
connection with the consummation of the transactions contemplated by Section
12.1.
ARTICLE XIII.
REFINANCING OF NOTES
--------------------
So long as no Lease Default or Lease Event of Default shall be in existence
and the ClO2 Lessee shall be simultaneously exercising its right under Section
13 of the ClO2 Participation Agreement corresponding hereto, and so long as
Lessee has not given notice of its election to purchase under Section 19 of the
Facility Lease, the Lessee shall have the right not more than twice during the
Term of the Facility Lease to request the Owner Participant and the Owner
Trustee to effect an optional prepayment of all, and not less than all, of the
Notes pursuant to Section 2.10(e) of the Indenture as part of a refunding or
refinancing operation. As soon as practicable after receipt of such request, the
Owner Participant and the Lessee will enter into an agreement, in form and
substance reasonably satisfactory to the parties thereto, as to the terms of
such refunding or refinancing as follows:
(a) the Lessee, the Owner Participant, the Indenture Trustee, the
Owner Trustee, and any other appropriate parties will enter into a
financing or loan agreement (which may involve an underwriting agreement in
connection with a public offering), in form and substance reasonably
satisfactory to the parties thereto, providing for (i) the issuance and
sale by the Owner Trustee or such other party as may be appropriate on the
date specified in such agreement (for the purposes of this Section 13, the
"Refunding Date"), such date to be the same date specified as the Refunding
--------------
Date under Section 13 of the ClO2 Participation Agreement, of debt
Securities in an aggregate principal amount (in the lawful currency of the
United States) equal to the principal amount of the Notes outstanding on
the Refunding Date plus, at the discretion of the Lessee, but subject to
the rights of Owner Participant set forth in the provisions following
clause (h) of this Section, the accrued and unpaid interest thereon and
underwriting fees, having the same maturity date as said Notes and having a
weighted average life to maturity which is not less than or greater than
the remaining weighted average life to maturity of said Notes (in each case
calculated in accordance with standard financial practice) by more than
three months, (ii) the application of the proceeds of the sale of such debt
Securities to the prepayment of all such Notes on the Refunding Date, and
(iii) payment by Lessee to the Person or Persons entitled thereto of all
other amounts, in respect of accrued interest, or
47
any Make-Whole Amount or other premium, if any, payable on such Refunding Date;
(b) the Lessee and the Owner Trustee will amend the Facility Lease such
that (i) if the Refunding Date is not a Rent Payment Date and the accrued and
unpaid interest on the Notes is not otherwise paid pursuant to clause (a) above,
the Lessee shall on the Refunding Date prepay that portion of the next
succeeding installment of Periodic Rent as shall equal the aggregate interest
accrued on the Notes outstanding to the Refunding Date, (ii) Periodic Rent
payable in respect of the period from and after the Refunding Date shall be
recalculated to preserve the Net Economic Return which the Owner Participant
would have realized had such refunding not occurred, provided that the net
present value of Periodic Rent shall be minimized to the extent consistent
therewith, and (iii) amounts payable in respect of Casualty Value and
Termination Value from and after the Refunding Date shall be appropriately
recalculated to preserve the Net Economic Return which the Owner Participant
would have realized had such refunding not occurred (it being agreed that any
recalculations pursuant to subclauses (ii) and (iii) of this clause (b) shall be
performed in accordance with the requirements for the adjustment in Periodic
Rent contained in Section 4(f) of the Facility Lease);
(c) the Owner Trustee will enter into an agreement to provide for the
securing thereunder of the debt Securities issued by the Owner Trustee pursuant
to clause (a) above in like manner as the Notes and/or will enter into such
amendments and supplements to the Indenture and the Deed of Trust as may be
necessary to effect such refunding or refinancing, which agreements, amendments
and/or supplements shall be reasonably satisfactory in form and substance to the
Owner Participant and the Lessee; provided that, notwithstanding the foregoing
(but subject to the provisions of clause (a) above), the Lessee reserves the
right to set the economic terms and other terms not customarily negotiated
between an Owner Participant and a lender of the refunding or refinancing
transaction to be so offered; provided, further, that no such amendment or
supplement will increase the obligations or have any adverse impact on the
rights of the Owner Participant under the Operative Agreements without the
consent of the Owner Participant;
(d) in the case of a refunding or refinancing involving a public offering
of debt Securities, neither the Owner Trustee nor the Owner Participant shall be
the "issuer" for Securities law purposes, the offering materials (including any
registration statement) for the refunding or refinancing transaction shall be
reasonably satisfactory to the Owner Participant and the Lessee shall provide
48
satisfactory indemnity to the Owner Trustee and the Owner Participant with
respect thereto;
(e) unless otherwise agreed by the Owner Participant, the Lessee shall
pay to the Owner Trustee as Supplemental Rent an amount equal to the
Make-Whole Amount or other premium, if any, payable in respect of Notes
outstanding on the Refunding Date, and all reasonable fees, costs and
expenses of such refunding or refinancing;
(f) the Lessee shall give the Indenture Trustee not less than 25 days
prior written notice of the Refunding Date;
(g) the Owner Participant, the Owner Trustee and the Indenture Trustee
shall have received (i) such opinions of counsel as they may reasonably
request concerning compliance with the Securities Act of 1933, as amended,
and any other applicable law relating to the sale of Securities and (ii)
such other opinions of counsel and such certificates and other documents,
each in form and substance satisfactory to them, as they may reasonably
request in connection with compliance with the terms and conditions of this
Section 13; and
(h) all necessary authorizations, approvals and consents shall have
been obtained;
provided, however, that the Lessee will, to the extent then known, promptly
-------- -------
provide to the Owner Participant, the Owner Trustee and the Indenture Trustee
substantially final terms and conditions of any such refunding or refinancing
not less than 30 days prior to the execution and delivery of the documents
contemplated hereunder in connection therewith; and provided, further, that (w)
no refunding or refinancing of the Notes will be permitted unless simultaneously
therewith the ClO2 Notes are refunded or refinanced by the ClO2 Lessee under
Section 13 of the ClO2 Participation Agreement, (x) no refunding or refinancing
of the Notes will be permitted if within 30 days after receipt by the Owner
Participant of a request from the Lessee to effect a refunding or refinancing
pursuant to this Section 13 and of information regarding the terms of such
refunding or refinancing necessary to render the opinion referred to below, the
Owner Participant reasonably determines (which determination may, at the Owner
Participant's election but at the Lessee's expense, be supported by a written
opinion of independent tax counsel selected by the Owner Participant) that there
will be a risk of adverse tax or other consequences (including, without
limitation, a non-de minimis risk of materially adverse tax consequences
resulting from the application of Section 467 of the Code and the Treasury
Regulations thereunder or from the payment by the Lessee of Supplemental Rent
referred to in clause (e) above) to the Owner Participant or the Owner Trustee
resulting from the
49
refunding or refinancing and gives notice of such determination in reasonable
detail to the Lessee; (y) the Lessee shall pay to or reimburse the Participants,
the Owner Trustee and the Indenture Trustee for all costs and expenses
(including reasonable attorneys' fees) paid or incurred by them in connection
with such refunding or refinancing; and (z) no refunding or refinancing of the
Notes will be permitted if it shall cause the Owner Participant to account for
the transaction contemplated hereby as other than a "leveraged lease" under the
Financial Accounting Standards Board ("FASB") Statement No. 13, as amended
(including any amendment effected by means of the adoption by FASB of a new
statement in lieu of FASB Statement No. 13). The Owner Participant agrees to
cooperate in good faith with the Lessee in effecting any such refunding or
refinancing; provided that in no event, in connection with or after giving
effect to, such refunding or refinancing shall the Owner Participant be exposed
to any unindemnified non-de minimis risk (including tax risk) to which it is not
exposed prior to such refunding or refinancing.
Notwithstanding the foregoing, if the Lessee shall fail to
effectuate a refinancing pursuant to the requirements of this Section 13,
including, without limitation, the payment of all amounts due and owing pursuant
to Section 2.10(e) of the Indenture, or if the ClO2 Lessee fails to effectuate a
refinancing of the ClO2 Notes pursuant to the requirements of Section 13 of the
ClO2 Participation Agreement, the Facility Lease and the Indenture shall
continue in full force and effect.
ARTICLE XIV.
MISCELLANEOUS
-------------
Section 14.1. Amendments. This Agreement may, from time to time and at any
----------
time, be amended or supplemented, by an instrument or instruments in writing
executed by the parties hereto; and further provided, that no such amendment or
----------------
supplement shall be effective unless consented to by the Required Lenders;
provided, that no such amendment or supplement shall be effective unless the
--------
same amendment or supplement is being executed with respect to the corresponding
provision of the ClO2 Participation Agreement or the ClO2 Lease.
Section 14.2. Notices. All communications under this Agreement shall be in
-------
writing or by facsimile and any such notice shall become effective (i) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (ii) upon receipt thereof, in the case of notice by United
States mail, certified or registered, postage prepaid, return receipt requested,
or (iii) upon confirmation of receipt thereof, in the case of notice by
facsimile, provided such transmission is promptly further confirmed in writing
by either of the methods set forth in clause (i) or (ii) above, in each case
50
addressed to the parties hereto at their addresses set forth beneath their
respective signatures below (or in the case of the Note Purchasers on Schedule 1
hereto) or at such other place as any such party may designate by notice given
in accordance with this Section 14.2 or in the case of the holders of the ClO2
Notes, as specified in Section 15.2 of the ClO2 Participation Agreement.
Section 14.3. Survival. All warranties, representations and covenants made
--------
by any party herein or in any certificate or other instrument delivered by any
party to any other party under this Agreement shall be considered to have been
relied upon by such other party and shall survive the consummation of the
transactions contemplated hereby on the Closing Date regardless of any
investigation made by such other party or on behalf of such other party. All
statements in any such certificate or other instrument by the Owner Participant,
the Owner Trustee or the Lessee or on behalf of the Owner Participant, the Owner
Trustee or the Lessee under this Agreement shall constitute warranties and
representations by the Owner Participant, the Owner Trustee, or, as the case may
be, the Lessee hereunder.
Section 14.4. Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and permitted assigns including each
successive holder of the Beneficial Interest and each successive holder of any
Note issued and delivered pursuant to this Agreement or the Indenture whether or
not an express assignment to any such holder of rights under this Agreement has
been made.
Section 14.5. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
-------------
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.
Section 14.6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each executed counterpart constituting an original but all
together only one Agreement.
Section 14.7. Headings and Table of Contents. The headings of the sections
------------------------------
of this Agreement and the Table of Contents are inserted for purposes of
convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
51
Section 14.8. Limitations of Liability.
------------------------
(a) Liabilities of the Participants. No Participant shall have any
-------------------------------
obligation or duty to the Lessee, to any other Participant or to others with
respect to the transactions contemplated hereby except those obligations or
duties of such Participant expressly set forth in this Agreement and the other
Operative Agreements and no Participant shall be liable for performance by any
other party hereto of such other party's obligations or duties hereunder.
Without limitation of the generality of the foregoing, under no circumstances
whatsoever shall any Participant be liable to the Lessee, nor shall any
Participant be liable to any other Participant, for any action or inaction on
the part of the Owner Trustee or the Indenture Trustee in connection with the
transactions contemplated herein, whether or not such action or inaction is
caused by willful misconduct or gross negligence of the Owner Trustee or the
Indenture Trustee.
(b) No Recourse to Wilmington Trust Company. It is expressly understood and
---------------------------------------
agreed by and between the Owner Trustee, Wilmington Trust Company, the Lessee,
the Owner Participant, the Indenture Trustee, each Note Purchaser and any holder
of the Notes and their respective successors and assigns that, subject to the
proviso to this paragraph, this Agreement is executed by Wilmington Trust
Company, not individually or personally but solely as trustee under the Trust
Agreement in the exercise of the power and authority conferred and vested in it
as such trustee, that each and all of the representations, warranties,
undertakings and agreements herein made on the part of the Owner Trustee are
made and intended not as personal representations, warranties, undertakings and
agreements by Wilmington Trust Company or for the purpose or with the intention
of binding Wilmington Trust Company personally, but are made and intended for
the purpose of binding only the Trust Estate, that this Agreement is executed
and delivered by Wilmington Trust Company solely in the exercise of the powers
expressly conferred upon Wilmington Trust Company as trustee under the Trust
Agreement, that actions to be taken by the Owner Trustee pursuant to its
obligations hereunder may, in certain instances, be taken by the Owner Trustee
only upon specific authority of the Owner Participant, that, subject to the
proviso to this paragraph, nothing herein contained shall be construed as
creating any liability of Wilmington Trust Company, individually or personally,
or any incorporator or any past, present or future subscriber to the capital
stock of, or stockholder, officer or director of Wilmington Trust Company, to
perform any covenant either express or implied contained herein, all such
liability, if any, being expressly waived by the Lessee, the Indenture Trustee,
each Note Purchaser and any holder of the Notes and any person claiming by,
through or under such persons, and that so far as Wilmington Trust Company,
individually or personally is concerned, subject to the proviso to this
paragraph, the Lessee, the Indenture Trustee, each Note Purchaser and any holder
of the Notes and any person claiming by, through or
52
under such persons shall look solely to the Trust Estate for the performance of
any obligation of Wilmington Trust Company under this Agreement; provided,
however, that nothing in this Section 14.8 shall be construed to limit in scope
or substance those representations and warranties of Wilmington Trust Company
made expressly in its individual capacity set forth in Section 3.1 or the
indemnities of Wilmington Trust Company in its individual capacity set forth in
Section 8. The term "Owner Trustee" as used in this Participation Agreement
shall include any trustee succeeding Wilmington Trust Company as trustee under
the Trust Agreement or the Owner Participant if the trust created thereby is
revoked. Any obligation of the Owner Trustee hereunder may be performed by the
Owner Participant, and any such performance shall not be construed as revocation
of the trust created by the Trust Agreement. Nothing contained in this Agreement
shall restrict the operation of the provisions of the Trust Agreement with
respect to its revocation or the resignation or removal of the Owner Trustee
thereunder.
(c) No Recourse to Owner Participant. All payments of principal and
--------------------------------
interest and premium, if any, to be made under the Notes or the Indenture shall
be made only from the income and proceeds from the Indenture Estate and only to
the extent that the Indenture Trustee shall have sufficient income or proceeds
from the Indenture Estate to make such payments in accordance with the terms of
Article III of the Indenture. Each of the parties to this Agreement agrees that
neither the Owner Participant nor its permitted successors and assigns is or
shall be personally liable for any amount payable by the Owner Participant or
the Owner Trustee under any Operative Agreement, or for damages resulting from
the breach of its or the Owner Trustee's obligations under any Operative
Agreement, except as expressly provided in Section 8.
Section 14.9. Purchase of Beneficial Interest by Lessee; Termination of
---------------------------------------------------------
Trust by Owner Participant. (a) Anything to the contrary herein or in the other
--------------------------
Operative Agreements notwithstanding, the Lessee shall not purchase or otherwise
acquire the Beneficial Interest or any part thereof.
(b) Anything to the contrary herein or in the other Operative Agreements
notwithstanding, the Owner Participant hereby acknowledges and agrees that the
Trust established under the Trust Agreement shall not be subject to revocation
or termination by the Owner Participant prior to the payment in full and
discharge of the Notes and the ClO2 Notes and all other indebtedness secured by
the Indenture and the release of the Indenture and the Deed of Trust and the
liens and security interests granted thereby.
Section 14.10. Certain Limitations in Reorganization. The holder of any
-------------------------------------
Note and the Indenture Trustee agree that, should the Trust Estate or the Trust
become a debtor subject to the reorganization provisions of the Bankruptcy
Reform Act of 1978 or
53
any successor provision, they shall, upon the request of the Owner Participant,
make the election referred to in Section 1111(b)(1)(A)(i) of Title I of such Act
or any successor provision. Notwithstanding such election, if (1) the Trust
Estate or the Trust becomes a debtor subject to the reorganization provisions of
the Bankruptcy Reform Act of 1978 or any successor provision, (2) pursuant to
such reorganization provisions the Owner Participant is held to have recourse
liability to the debtor or the trustee of the debtor directly or indirectly on
account of any amount payable as principal, interest or premium on the Notes,
and (3) the holder of any Note or the Indenture Trustee actually receives any
Excess Amount (as defined below) which reflects any payment by the Owner
Participant on account of (2) above, then such Noteholder or the Indenture
Trustee, as the case may be, shall promptly refund to the Owner Participant such
Excess Amount. For purposes of this Section 14.10, "Excess Amount" means the
amount by which such payment exceeds the amount which would have been received
by any Noteholder or the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in (2) above. Nothing
contained in this Section 14.10 shall prevent any Noteholder or the Indenture
Trustee from enforcing any personal obligation (and retaining the proceeds
thereof) of the Owner Participant under this Agreement to the extent herein
provided, for which the Owner Participant has agreed by the terms of this
Agreement to accept personal responsibility.
Section 14.11. Amendment of Indenture, Deed of Trust and Trust Agreement.
---------------------------------------------------------
The Lessee hereby consents in all respects to the execution and delivery of the
Indenture, of the Deed of Trust and of the Trust Agreement and to all of the
terms of each; it being agreed that such consent shall not be construed to
require the Lessee's consent to any future supplement to, or amendment, waiver
or modification of the terms of the Indenture, the Deed of Trust, the Trust
Agreement or any Note.
Section 14.12. Submission to Jurisdiction. Each of the Lessee, the Owner
--------------------------
Participant, the Owner Trustee, the Note Purchasers and the Indenture Trustee
(i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme
Court of the State of New York, New York County (without prejudice to the right
of any party to remove to the United States District Court for the Southern
District of New York) and to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York for the purposes of any
suit, action or other proceeding arising out of this Agreement, the other
Operative Agreements, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the parties hereto
or their successors or assigns; (ii) hereby irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in such New
York State court, or in such federal court; and (iii) to the extent permitted by
Applicable Law, hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, or
54
otherwise, in any such suit, action or proceeding any claim that is not
personally subject to the jurisdiction of the above-named courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement, the other
Operative Agreements, or the subject matter hereof or thereof may not be
enforced in or by such court.
Section 14.13. Waiver of Jury Trial. The parties hereto waive any right to
--------------------
have a jury participate in resolving any dispute, whether sounding in contract,
tort, or otherwise, between them arising out of, connected with, related to or
incidental to the relationship established between them in connection with this
Agreement or any other Operative Agreement or any other instrument, document or
agreement executed or delivered in connection herewith or therewith or the
transactions related hereto or thereto. The parties hereto hereby agree and
consent that any such claim, demand, action or cause of action shall be decided
by court trial without a jury and that any of them may file an original
counterpart or a copy of this Agreement with any court as written evidence of
the consent of the parties hereto the waiver of their right to a trial by jury.
Section 14.14. Complete Facility. The Lessee covenants and agrees, without
-----------------
limiting its obligations under the Facility Lease and the other Operative
Agreements, that it shall obtain and maintain, or cause to be obtained and
maintained, all Permits, rights and easements, and provide access to such
utility services, sufficient to permit during the Term of the Site Lease (i) the
locating, occupying, owning, selling, leasing, connecting, operating,
maintaining, replacing, renewing, repairing and removing of the Facility, (ii)
ingress to and egress from the Leased Property, (iii) intake and discharge of
water and other utilities necessary for the operation of the Facility, (iv) the
operating of the Leased Property in such a manner as to cause the Facility to
perform on a daily basis, in commercial operation, the functions for which it
was specifically designed at Design Capacity in accordance with the Plans
therefor, and (v) the preservation and enforcement by the Owner Trustee of its
rights in and to the Leased Property and the easements and other rights with
respect to the Site Lease Property described or referred to in the Site Lease,
except such Permits and rights the absence of which would not cause a Material
Adverse Effect. The Lessee shall have such access to the Leased Property as
shall be reasonably necessary to comply with its obligations under this Section.
The Lessee further covenants and agrees:
(a) that during the Site Lease Term, the Lessee shall not, without the
Owner Trustee's, the Indenture Trustee's and each Participant's prior
written consent, terminate the Railway License, the ▇▇▇▇▇ River Agreement,
the ▇▇▇▇▇ River Easement, the County Road Documents; and
55
(b) that during the Site Lease Term, the Lessee shall send copies of all
notices (other than notices relating to pricing or other operations in the
ordinary course of business) given or received under the Railway License, the
▇▇▇▇▇ River Agreement, the ▇▇▇▇▇ River Easement and the County Road Documents to
the Owner Trustee, the Indenture Trustee and each Participant within five (5)
Business Days after receipt thereof.
[signature pages follow]
56
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers all as of the day and year first
above written.
▇▇▇▇ & ▇▇▇▇▇▇, INC., as Lessee
By: s/s ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
By: s/s ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President and Chief Financial Officer
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
57
WILMINGTON TRUST COMPANY,
not individually (except to the extent expressly
stated herein) but solely as Owner Trustee
By: s/s ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Financial Services Officer
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to Owner Participant
58
SELCO SERVICE CORPORATION,
as Owner Participant
By: s/s ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
c/o Key Equipment Finance
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Leveraged Lease Administrator
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
59
FLEET CAPITAL CORPORATION,
as Note Purchaser
By: s/s ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Vice President
60
▇▇▇▇▇▇ FINANCIAL LEASING, INC.,
as Note Purchaser
By: s/s ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: VP
61
THE CIT GROUP/EQUIPMENT FINANCING
INC., as Note Purchaser
By: s/s ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: VP
62
GENERAL ELECTRIC CAPITAL BUSINESS
ASSET FUNDING CORPORATION,
as Note Purchaser
By: s/s ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: VP
63
▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION, (formerly
known as First Security Bank,
National Association), as
Indenture Trustee
By: s/s ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
64
Schedule 1
Note Purchaser Information
--------------------------
Note Purchaser Commitment
-------------- ----------
Fleet Capital Corporation $20,175,205.94
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Mail Stop: RI/MO/284
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Credit Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Series A
Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying
each payment as "8.96% Senior Notes,
Series A, due January 2, 2008, of Wilmington
Trust Company, Trustee (▇▇▇▇ & Talbot, Inc.,
Lessee), principal, premium or interest") to:
Fleet Bank RI
ABA No. ▇▇▇▇▇▇▇▇▇
For the account of Fleet Capital Leasing
Account No. 015-▇▇▇▇▇▇▇
Re: ▇▇▇▇ & ▇▇▇▇▇▇, Inc.
Upon receipt contact: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Notices
All notices and communications, including
notices with respect to payments and written
confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Series A Notes are
to be issued: None
Schedule 1 - Page 1
Note Purchaser Commitment
-------------- ----------
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
Schedule 1 - Page 2
Note Purchaser Commitment
-------------- ----------
The CIT Group/Equipment Financing Inc. $15,000,000.00
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇ ▇▇▇▇
Payments
All payments on or in respect of the Series A
Notes to be by certified check (identifying each
payment as "8.96% Senior Notes, Series A, due
January 2, 2008, of Wilmington Trust
Company, Trustee (▇▇▇▇ & Talbot, Inc.,
Lessee), principal, premium or interest") to:
The CIT Group/Equipment Financing Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Notices
All notices and communications, including
notices with respect to payments and written
confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Series A Notes are
to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇-▇▇▇▇
Schedule 1 - Page 3
Note Purchaser Commitment
-------------- ----------
▇▇▇▇▇▇ Financial Leasing, Inc. $12,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: CEF Portfolio Manager
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Series A
Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying
each payment as "8.96% Senior Notes,
Series A, due January 2, 2008, of Wilmington
Trust Company, Trustee (▇▇▇▇ & ▇▇▇▇▇▇, Inc.,
Lessee), principal, premium or interest") to:
Bank of America
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account Number: 8188801273
Reference: ▇▇▇▇ & Talbot Acct. #192-0257
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Notices
All notices and communications, including
notices with respect to payments and written
confirmation of each such payment, to be
addressed as first provided above.
Name of Nominee in which Series A Notes are
to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
Schedule 1 - Page 4
Note Purchaser Commitment
-------------- ----------
General Electric Capital Business Asset Funding Corporation $0
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Series A Notes to be by bank wire transfer
of Federal or other immediately available funds (identifying each payment as
"8.96% Senior Notes, Series A, due January 2, 2008, of Wilmington Trust Company,
Trustee (▇▇▇▇ & ▇▇▇▇▇▇, Inc., Lessee), principal, premium or interest") to:
Bankers Trust
New York, New York
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account Number: ▇▇-▇▇▇-▇▇▇
Account Name: GE-BAF
Attention: Indirect Ops. 1
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Series A Notes are
to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇-▇▇▇▇
Schedule 1 - Page 5
Schedule 3.2(r)
ERISA Matters
-------------
1. Exception to Section 3.2(r)(iv):
A Reportable Event within the meaning of ERISA ss. 4043(c)(3) occurred with
respect to the Restated Defined Benefit Retirement Income Plan for Certain
Employees of ▇▇▇▇ & Talbot, Inc. in connection with the sale of the Tissue
Business of the Consumer Products Division of ▇▇▇▇ & ▇▇▇▇▇▇, Inc. (the Tissue
Business) to Plainwell Paper Company (Plainwell) on March 8, 1998. Notice to the
PBGC was waived under Department of Labor Regulation ss. 4043.23(c)(2).
2. Exception to Section 3.2(r)(vi):
In connection with the sale of the Tissue Business, Plainwell agreed that
it would intend to comply with the requirements of ERISA ss. 4204 so that no
complete or partial withdrawal would be considered to have occurred by the
Lessee or one or more ERISA Affiliates with respect to the Paper Industry
Union-Management Pension Fund, a Multiemployer Plan. If there is a partial or
complete withdrawal by Plainwell from the Paper Industry Union-Management
Pension Fund prior to the end of the period prescribed by ERISA ss. 4204,
applicable law may hold the Lessee and one or more ERISA Affiliates secondarily
liable for any withdrawal liability the Lessee or one or more ERISA Affiliates
would have incurred had the agreement to comply with Section 4204 not been
reached. The potential estimated withdrawal liability amounts to $11,133,800.
Such figures consider employee and pensioner data used in the valuation of the
Paper Industry Union-Management Pension Fund as of January 1, 1997 and the
benefit levels in effect as of December 31, 1996. Additionally, the calculations
reflect data on terminated employers for the years 1981 through 1996.
3. Lessee's affiliates within the meaning specified in Section V(a)(1) of
Prohibited Transaction Exemption 95-60 for purposes of Section 3.2(r)(viii):
(a) Penn Timber, Inc.
(b) ▇▇▇▇ & Talbot, Wis., Inc.
(c) ▇▇▇▇ & ▇▇▇▇▇▇ F.S.C., Inc.
(d) ▇▇▇▇ & Talbot Relocation Services, Inc.
(e) ▇▇▇▇ & ▇▇▇▇▇▇ International Ltd.
Schedule 3.2(r) - Page 1
(f) ▇▇▇▇ & Talbot Pulp Ltd.
(g) P & T Power Company
(h) ▇▇▇▇ & ▇▇▇▇▇▇ Pulp Sales U.S., Inc.
(i) Harmac Pacific Inc.
4. Pension Plans currently in effect under Section 3.2(r)(viii):.
(a) Restated Defined Benefit Retirement Income Plan for Certain Employees
of ▇▇▇▇ & Talbot, Inc.
(b) Retirement Plan for Production Employees of the Consumer Products
Division of ▇▇▇▇ & ▇▇▇▇▇▇, Inc.
(c) Retirement Plan for Non-Bargaining Employees of the Wood Products
Division of ▇▇▇▇ & ▇▇▇▇▇▇, Inc.
(d) ▇▇▇▇ & Talbot, Wis., Inc. Hourly Employees IWA Local 4-362 Retirement
Plan1
-----------------
(1) This Schedule 3.2(r) does not include any Canadian plans or any other plan
for which Title IV of ERISA is made inapplicable pursuant to
ERISAss.4021(b)(7).
Schedule 3.2(r) - Page 2
Schedule 3.2(s)
Environmental Matters
---------------------
1. Matters disclosed in the Phase I Environmental Site Assessment report
dated August 23, 1999, for the ▇▇▇▇▇▇ Pulp Mill located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇, prepared by ▇▇▇▇▇ International Incorporated;
2. Matters disclosed in the Addendum to the Phase I Site Assessment report
dated September 29, 1999;
3. Environmental Permits:
(a) NPDES Permit No. 101114. Expiration 7-1-98. Renewal submitted on time,
which allows operation under this permit until disposition is made on the
application. No disposition expected until 2001;
(b) General Storm Water Permit No. 1200Z. Expiration 6-30-2002;
(c) Air Oregon Permit No. 22-3501. Expiration 10-1-2000. Renewal application
to be submitted by 10-1-99; and
4. Asbestos Survey of the ▇▇▇▇▇▇ Pulp Mill dated September 22, 1999.
Schedule 3.2(s)
Schedule 3.2(w)
Existing Leases
---------------
------------------------------------------------------------------------------------------------------------------------------------
Tenant Date Lease Term Rent/Acreage Location
------ ---- ---------- ------------ --------
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Farms - Farm Lease 11/22/85 One year lease, $51 per acre x 257 Portions of Sections 2 & 3,
renewable annually, acres = T14S, R4W, WM; Portions of
terminates 8/31/2000 $13,107 per year Sections 34 & 35, T13S, R4W,
WM; all in Linn County, OR
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Farms - Operating Lease 9/28/94 One year lease, $51 per acre x 18 Portions of Section 34,
renewable annually, acres = T13S,R4W, WM, in Linn County, OR
terminates 8/31/2000 $918 per year
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇, ▇▇. - Farm Lease 11/26/85 One year lease, $50 per acre x 64 Portion of Section 31,
renewable annually, acres = $3,200 per T13S,R4W, WM, in Linn County, OR
terminates 8/31/2000 year
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Farm Lease 9/09/94 One year lease, $50 per acre x 39 Portions of Section 3, T14S,
renewable annually, acres = $1,950 per R4W, WM, in Linn County, OR
terminates 8/31/2000 year
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Operating Lease 9/09/94 One year lease, $50 per acre x 21 Portions of Sections 2, 3 & 34
renewable annually, acres = $1,050 per in T13 & 14S, R4W, WM, in Linn
terminates 8/31/2000 year County, OR
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ - Farm Lease 9/09/94 One year lease, $50 per acre x 142 Portions of Section 33, T13S,
renewable annually, acres = $7,100 per R4W, WM, in Linn County, OR
terminates 8/31/2000 year
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇- Farm Lease 12/31/86 One year lease, $50 per acre x 101 Portions of Sections 31, 33 &
renewable annually, acres = $5,050 per 34 of T13S, R4W, WM, in
terminates 8/31/2000 year Linn County, OR
------------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(w) - Page 1
------------------------------------------------------------------------------------------------------------------------------------
Tenant Date Lease Term Rent/Acreage Location
------ ---- ---------- ------------ --------
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ Van 9/9/94 One year lease, $50 per acre x 54 Portions of Section 33, T13S,
Leeuwen, dba ▇▇▇ & ▇▇▇▇ Van renewable annually, acres = $2,700 per R4W, WM, in Linn County, OR
Leeuwen Farms - Farm Lease terminates 8/31/2000 year
------------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(w) - Page 2
Annex I - Definitions
See Exhibit 4.4 Amended and Restated Facility Lease between
▇▇▇▇ & ▇▇▇▇▇▇, Inc. and Wilmington Trust Company, dated
December 27, 2001 - Annex I.
Annex I
Exhibit A - Form of Trust Agreement
Between SELCO Service Corporation - Owner Participant and
Wilmington Trust Company - Owner Trustee (not included
herein).
Exhibit A
================================================================================
Exhibit B
SITE LEASE
Dated September 30, 1999
Between
▇▇▇▇ & TALBOT, INC.,
Landlord
And
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner Trustee,
Tenant
================================================================================
(Pulpmill, Halsey, Oregon)
Exhibit B
TABLE OF CONTENTS
SECTION HEADING PAGE
Section 1. Definitions ..........................................................................1
Section 2. Lease of Site ........................................................................1
Section 3. Rent .................................................................................2
Section 4. Use, Alterations, Improvements, Etc ..................................................2
Section 5. Early Termination ....................................................................3
Section 6. Taxes, Liens, Maintenance, Etc .......................................................3
Section 6.1. Taxes and Other Charges ......................................................3
Section 6.2. Liens ........................................................................3
Section 6.3. Maintenance; Insurance .......................................................3
Section 6.4. Casualty or Condemnation .....................................................3
Section 7. Mortgage of the Tenant's Interest; Rights of Indenture Trustee .......................4
Section 8. Return ...............................................................................5
Section 8.1. Surrender of Site ............................................................5
Section 8.2. Landlord's Purchase Option ...................................................5
Section 9. Determination of Fair Market Rental Value ............................................5
Section 10. Successors and Assigns ...............................................................6
Section 11. Headings and Table of Contents .......................................................6
Section 12. Counterparts .........................................................................6
Section 13. Governing Law ........................................................................6
Section 14. Notices ..............................................................................7
Section 15. Bankruptcy ..........................................................................8
Section 16. The Facility Lease ...................................................................8
Section 17. Severability .........................................................................9
Section 18. Recording ............................................................................9
Section 19. Default ..............................................................................9
Signature Page 10
Exhibit B - i
ATTACHMENTS:
Exhibit A -- Description of Site (See Exhibit C of Exhibit 4.4 Amended and
Restated Facility Lease between ▇▇▇▇ and Talbot, Inc. and
Wilmington Trust Company dated December 27, 2001).
Annex I -- Definitions (See Annex I of Exhibit 4.4 Amended and Restated
Facility Lease between ▇▇▇▇ and Talbot, Inc. and Wilmington
Trust Company dated December 27, 2001).
Exhibit B - ii
SITE LEASE
This SITE LEASE dated September 30, 1999, is between ▇▇▇▇ & ▇▇▇▇▇▇, INC., a
Delaware corporation (the "Landlord"), as landlord hereunder, and WILMINGTON
TRUST COMPANY, a Delaware banking corporation, not in its individual capacity
but solely as Owner Trustee (the "Tenant"), as tenant hereunder.
IN CONSIDERATION OF the mutual covenants and agreements hereinafter set
forth, and intending to be legally bound, the Tenant and the Landlord hereby
agree as follows:
SECTION 1. DEFINITIONS.
The capitalized terms used in this Site Lease shall have the respective
meanings set forth in Annex I attached hereto unless elsewhere defined or the
context shall otherwise require.
SECTION 2. LEASE OF SITE.
Subject to all the terms and conditions of this Site Lease, the Landlord
hereby, for the Site Lease Term, leases to the Tenant the Site described in
Exhibit A attached hereto, together with any rights of way, licenses, easements,
entitlements and appurtenances now or hereafter belonging or pertaining thereto.
Subject to the terms and provisions of this Site Lease, the Landlord grants
to the Tenant the right to remain in sole and full possession of the Site and
the rights hereinafter specified with respect to the other Site Lease Property
for the Site Lease Term and warrants that it has full right and authority to
grant the interests in the Site Lease Property in the manner and form herein
provided, and that it will defend and hold harmless the Tenant and its
successors and assigns in their peaceable, quiet, undisputed and exclusive
possession and enjoyment of the Site against the claims of all persons, except
for Liens described in clause (g) of the definition of "Permitted Encumbrances"
and the title exceptions described in Schedule B-I to the Title Policy issued on
the Closing Date to the Tenant.
Except as set forth in Section 19 hereof, effective from and after the date
hereof, Landlord waives and relinquishes any Lien or other right in the nature
of a landlord's lien or privilege which it might now or hereafter otherwise have
in or with respect to the Site, the Facility or any part thereof.
The parties hereto acknowledge that the title to the Facility and, except
as set forth in Section 8 of the Facility Lease, all improvements now or
hereafter installed on the Site by any party (including, without limitation,
Landlord) during the Site Lease Term are and will be owned by the Tenant. It is
the intention of the parties hereto that the separation of the title to the Site
from the title to the Facility is to remain so separated until the expiration of
the Site Lease Term.
Exhibit B - 1
SECTION 3. RENT.
The Tenant agrees to pay the Landlord rent ("Periodic Site Rent") in
consecutive semiannual installments (other than the first rent payment, which
shall be in respect of the period from the Closing Date to the first Periodic
Site Rent Payment Date), each in an amount equal to the Periodic Site Rent
Amount, payable in arrears on each Periodic Site Rent Payment Date before the
Post-Facility Lease Date and in advance after the Post-Facility Lease Date;
provided that, so long as the Landlord shall be the Lessee under the Facility
Lease, the Tenant's obligation to make Periodic Site Rent payments shall be
satisfied by its concurrent right to receive Periodic Site Rent under the
Facility Lease.
SECTION 4. USE, ALTERATIONS, IMPROVEMENTS, ETC.
The Tenant may use the Site and the Facility for any legal business
purpose, including, without limitation, the same purpose and business as
Landlord may use the Site and the Facility for under the Facility Lease. During
the Site Lease Term, the Tenant may, in its discretion, from time to time alter
or improve, or cause to be altered or improved, the Site or any part thereof, in
any manner it deems necessary or desirable, to carry on any activity permitted
hereunder, including the construction, addition, alteration, demolition and
removal of any buildings, equipment, roads or other structures, items of
personal property or fixtures and any grading or landscaping of the Site;
provided, however, that so long as the Facility Lease is in effect, the Tenant
shall refrain from any action permitted under this Section 4, except to the
extent such action is undertaken by Tenant in its capacity as lessor under, and
in accordance with, the Facility Lease.
SECTION 5. EARLY TERMINATION.
The Site Lease Term shall automatically expire upon the earlier to occur of
(a) the occurrence of a termination date specified by the Tenant in a written
notice delivered to the Landlord at least 30 days prior to such date and (b) the
transfer of the Facility to the Lessee pursuant to the exercise by Lessee of any
of its rights to purchase the Facility pursuant to any of the Operative
Agreements and payment of all amounts due and payable in connection therewith.
Notwithstanding anything to the contrary contained in this Site Lease, no
event, occurrence or failure to perform by (or on behalf of) Tenant shall
constitute a default or an event of default hereunder, and Landlord shall have
no right (whether conferred by statute or otherwise) to terminate this Site
Lease or to take possession of the Site, so long as any sums remain to be paid
at any time by Landlord as Lessee under the Facility Lease or under any other
Operative Agreement.
Exhibit B - 2
SECTION 6. TAXES, LIENS, MAINTENANCE, ETC.
Section 6.1. Taxes and Other Charges. So long as this Site Lease remains in
effect, the Landlord shall, at its own cost and expense, pay as and when the
same shall become due and payable all general and special taxes levied upon the
Site Lease Property or the Tenant's interest hereunder in the Site Lease
Property and any fees, assessments or other governmental or quasi-governmental
charges of whatsoever kind or character, including interest and penalties, by
whomsoever payable, on or relating to the Site Lease Property or the Tenant's
interest hereunder in the Site Lease Property other than taxes, fees,
assessments, or other governmental or quasi-governmental charges not due and
payable or the amount or validity of which is being contested by a Permitted
Contest.
Section 6.2. Liens. So long as this Site Lease remains in effect:
(a) The Landlord shall, at its own cost and expense, keep the
Site Lease Property free and clear of any and all Liens, charges and
encumbrances of persons claiming by, through or under the Landlord
other than Permitted Encumbrances; and
(b) The Tenant shall, at its own cost and expense, keep the Site
Lease Property free and clear of any and all Liens, charges and
encumbrances resulting from acts or omissions of the Tenant or claims
against the Tenant unrelated to its interest in the Site Lease
Property which impair the right, title and interest of the Landlord in
the Site Lease Property, other than Permitted Encumbrances specified
in clauses (a) through (d) and (f) of the definition thereof.
Section 6.3. Maintenance; Insurance. Before the Post-Facility Lease Date
the Landlord and after the Post-Facility Lease Date the Tenant shall, at its own
cost and expense:
(a) maintain the Site Lease Property in accordance with the
provisions of paragraphs (a), (b), (c) and (d) of Section 8 of the
Facility Lease, which provisions are by this reference incorporated
herein; and
(b) maintain with respect to the Site Lease Property the
insurance coverage required by Section 7 of the Facility Lease with
respect thereto, except that, subject to Section 7 of the Facility
Lease, losses under such insurance shall be payable directly to the
Landlord and the Tenant as their respective interests may appear.
Section 6.4. Casualty or Condemnation. Any payment, including condemnation
awards, received at any time by Landlord or Tenant as a result of a Casualty
Occurrence or a requisition or taking by a Governmental Authority when the
Facility Lease is in effect shall be distributed in accordance with Section 13
of the Facility Lease. Any such payment received by Landlord or Tenant after the
Facility Lease has expired or has been terminated shall be applied as follows:
so much of such payments as shall be necessary to pay in full all sums owing to
Tenant, as lessor under the Facility Lease or under any other Operative Document
shall be retained by, or paid over to, Tenant, and the balance (if any) of such
payments shall be retained by, or paid over to Landlord.
Exhibit B - 3
SECTION 7. MORTGAGE OF THE TENANT'S INTEREST; RIGHTS OF INDENTURE TRUSTEE.
(a) The Landlord and the Tenant acknowledge that all the right, title and
interest of the Tenant in this Site Lease and the Site Lease Property,
simultaneously with the execution hereof, are being mortgaged, pledged and
assigned to the Indenture Trustee under the Deed in Trust held by the Indenture
Trustee as a part of the Collateral under the Indenture, as security for the
indebtedness from time to time issued and outstanding under and secured by the
Indenture. The Landlord hereby consents to the Deed of Trust and the Indenture
becoming a lien on the right, title and interest of the Tenant in and to this
Site Lease and the Site Lease Property. The Landlord acknowledges that the
Facility shall be and remain the property of the Tenant until the expiration or
earlier termination of the Site Lease Term and, upon the occurrence of an Event
of Default under the Indenture, the interest of the Tenant in this Site Lease
and the Site Lease Property (or any part thereof) may be sold by the Indenture
Trustee, through foreclosure of the Deed of Trust, or otherwise, to repay the
Notes and all other sums coming due under the Indenture. If the interest of the
Tenant in this Site Lease and in the Site Lease Property shall be sold by the
Indenture Trustee as hereinabove and in the Deed in Trust provided, the Landlord
shall recognize the purchaser or transferee of such interest as if such party
had been the tenant under this Site Lease and such party shall succeed to all of
the rights and obligations of the Tenant hereunder.
(b) The Landlord shall, upon three (3) Business Days' prior written notice
by the Tenant or by the Indenture Trustee, from time to time during the Site
Lease Term, execute, acknowledge and deliver to the Tenant and the Indenture
Trustee, a statement in writing certifying that this Site Lease is unmodified
and in full force and effect (and if there shall have been modifications to this
Site Lease, that the same is in full force and effect, except as modified, and
stating such modifications) and the dates to which the rent and other payments
under this Site Lease have been paid by the Tenant in advance (if any).
(c) The Landlord represents that it has full right, power and lawful
authority to enter into this Site Lease and to transfer the interests in the
Site Lease Property pursuant to this Site Lease.
(d) Unless and until the Landlord shall have received written notice from
the Indenture Trustee that the Lien of the Deed of Trust and the Indenture has
been released (i) no amendment or modification of, or waiver by or consent of
the Tenant in respect of, any of the provisions of this Site Lease shall be
effective unless the Indenture Trustee shall have joined in such amendment,
modification, waiver or consent or shall have given its prior written consent
thereto, (ii) except as otherwise provided in the Indenture, the Indenture
Trustee shall have the sole right to exercise all rights, privileges and
remedies of the Tenant (either in its own name or in the name of the Owner
Trustee for the use and benefit of the Indenture Trustee), and (iii) any notice
given by the Landlord hereunder shall be concurrently delivered to the Indenture
Trustee.
Exhibit B - 4
SECTION 8. RETURN.
Section 8.1. Surrender of Site. Upon the expiration of the Site Lease Term,
the Tenant will peaceably and quietly yield up and surrender possession of the
Site Lease Property to the Landlord free of (a) Liens, charges, encumbrances and
claims resulting from acts or omissions of the Tenant or claims against the
Tenant unrelated to its interest in the Site Lease Property, other than
Permitted Encumbrances, (except Lessor Liens) and (b) Liens, charges and
encumbrances which the Landlord has assumed or is obligated to discharge under
any of the Lessee Agreements. Subject to the Landlord's rights under the
Facility Lease, the Tenant shall have the right, but not the obligation, to
remove all or any part of the Facility from the Site at any time prior to the
expiration of the Site Lease Term and for one year thereafter. In connection
with such removal the Tenant may enter upon the Site for such period of time as
shall be reasonably required by the Tenant to accomplish such removal, provided
that the Tenant shall complete such removal within one year after the expiration
of the Site Lease Term. Removal of the Facility by the Tenant in the manner
hereinabove provided shall not give rise to any claim for compensation by the
Landlord, and no claim of ownership by the Landlord of any portion of the
Facility shall prevent such removal. The Tenant shall use reasonable care to
avoid unnecessary damage to the Site or other property owned by the Landlord in
connection with any removal of the Facility pursuant to this Section. The
Landlord shall cooperate fully in any such removal and will render such
assistance and make available such suitable facilities as may at the time be
available as the Tenant shall reasonably request.
Section 8.2. Landlord's Purchase Option. The Tenant shall have the right,
upon 30 days written notice prior to its surrender of the Site Lease Property to
the Landlord pursuant to Section 8.1, to require the Landlord, at Landlord's
sole risk and expense, to dismantle any or all movable parts of the Facility,
remove them from the Site Lease Property and cause them to be delivered to a
railhead or other suitable common carrier for shipment to a disposal site, all
as may be specified by the Tenant. Notwithstanding the foregoing, after (but
only after) the Tenant shall have exercised the right set forth in the preceding
sentence, the Landlord shall have the option to purchase the Facility at a price
equal to the greater of $1.00 or the fair market value of the Facility
(dismantled and sold at auction) determined in accordance with the Appraisal
Procedure, less the cost the Landlord would have incurred to remove the Facility
as provided in the first sentence of this Section 8.2, to remediate the Site and
to rezone and prepare the Site for non-industrial use. Payment of the purchase
price shall be made on the date of purchase in immediately available funds
against delivery of a quitclaim deed and ▇▇▇▇ of sale transferring and assigning
to the Landlord to all right, title and interest of the Tenant in and to the
Facility, free and clear of all Liens other than Lessor's Liens attributable to
the Tenant.
SECTION 9. DETERMINATION OF FAIR MARKET RENTAL VALUE.
At such time as such determination shall be relevant, the Tenant and the
Landlord shall consult for the purpose of determining the Fair Market Rental
Value for the Site, and any such
Exhibit B - 5
value agreed upon in writing shall constitute the Periodic Site Rent
Amount. If the Tenant and the Landlord fail to agree upon such value within 30
days after notice pursuant to the first sentence of this paragraph, such value
shall be determined by the Appraisal Procedure. Such Fair Market Rental Value
shall be determined on the basis of, and shall be equal in amount to, the value
which would obtain in an arm's-length transaction between an informed and
willing tenant (other than a tenant currently in possession) and an informed and
willing landlord under no compulsion to lease. Any such determination shall be
made on the basis of a lease having terms and conditions (other than the lease
term and fixed rental) similar to the terms and conditions of this Site Lease.
All costs and expenses of any Appraisal Procedure pursuant to this Section 9
shall be borne by the Landlord.
SECTION 10. SUCCESSORS AND ASSIGNS.
This Site Lease shall be binding upon and shall inure to the benefit of,
and shall be enforceable by, the Landlord and the Tenant and their respective
successors and permitted assigns. Without limiting the foregoing, the Landlord
shall not assign, sublease or otherwise transfer its rights and interest as
landlord hereunder. Tenant may, from time to time, sublease all or any part of
the Site and/or the Facility pursuant to the Facility Lease and, to the extent
permitted by and subject to the terms and provisions of the other Operative
Agreements, assign Tenant's interests hereunder in connection with an assignment
of its interests as Lessor under the Facility Lease. After the expiration or
termination of the Facility Lease, the Tenant may sublease or assign this Site
Lease to any person without the consent of the Landlord. From and after the date
of any such assignment or sublease, the Landlord shall look exclusively to the
assignee or sublessee for the performance of all obligations of the Tenant
hereunder.
SECTION 11. HEADINGS AND TABLE OF CONTENTS.
The headings preceding the various sections and the Table of Contents are
for convenience of reference only and shall not be deemed to affect the meaning
or construction hereof.
SECTION 12. COUNTERPARTS.
This Site Lease may be executed in any number of counterparts, each
counterpart constituting an original but all together one Site Lease.
SECTION 13. GOVERNING LAW.
THIS SITE LEASE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF OREGON
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
Exhibit B - 6
SECTION 14. NOTICES.
All communications under this Site Lease shall be in writing or by
facsimile and any such notice shall become effective (i) upon personal delivery
thereof, including, without limitation, by overnight mail or courier service,
(ii) upon receipt thereof, in the case of notice by United States mail,
certified or registered, postage prepaid, return receipt requested, or (iii)
upon confirmation of receipt thereof, in the case of notice by facsimile,
provided such transmission is promptly further confirmed in writing by either of
the methods set forth in clause (i) or (ii) above, in each case addressed as set
forth below or at such other place as any such party may designate by notice
given in accordance with this Section 14.
If to the Tenant: WILMINGTON TRUST COMPANY
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Owner Participant at
SELCO SERVICE CORPORATION
c/o Key Corp Leasing
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Leveraged Lease Administrator
Fax:
If to the Landlord: ▇▇▇▇ & ▇▇▇▇▇▇, INC.
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P. O. Box 8171
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Exhibit B - 7
If to the Indenture
Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 15. BANKRUPTCY.
It is expressly understood and agreed that for purposes of Section 365(h)
of the Bankruptcy Code, 11 U.S.C. Section 365(h), (a) Tenant shall be deemed to
be in possession of the Site by virtue of the possessory interest therein
granted to Tenant under this Site Lease whether or not all or any part of the
Site has been subleased by Tenant and (b) in the event of any rejection or
disaffirmance of this Site Lease in any bankruptcy or similar proceeding
relating to Landlord, Tenant may elect to remain in possession of the Site for
the balance of the Site Lease Term, including all extensions exercisable
hereunder, at the option of Tenant.
SECTION 16. THE FACILITY LEASE.
So long as the Facility Lease remains in effect or the Landlord, as Lessee
under the Facility Lease, is otherwise liable for amounts in respect thereof or
under the other Operative Agreements, (i) Landlord shall look solely to the
Lessee under the Facility Lease for the performance and discharge of Tenant's
obligations and liabilities under this Site Lease (other than with respect to
Lessor's Liens and the restrictions on Tenant's rights of assignment and
subleasing under Section 10) with the same force and effect as though Tenant had
performed the same, (ii) Tenant shall have no liability hereunder (other than
with respect to Lessor's Liens and the restrictions on Tenant's rights of
assignment and subleasing under Section 10), (iii) other than with respect to
any events arising out of any failure to fulfill obligations with respect to
Lessor's Liens and the restrictions on Tenant's rights of assignment and
subleasing under Section 10, no default or event of default shall arise
hereunder and (iv) the rights of Tenant hereunder shall not be affected by any
failure of Tenant to perform or discharge such liabilities or obligations
notwithstanding (a) any continuation of any such failure after the end of the
term of the Facility Lease or (b) that such failure first became known or
apparent after the end of the term of the Facility Lease. No such performance or
discharge by or on behalf of the Landlord, as Lessee under the Facility Lease,
shall be deemed a merger of the Facility Lease with this Site Lease or a merger
of the estate of the Owner Trustee under the Facility Lease with the estate of
the Lessee thereunder.
Exhibit B - 8
SECTION 17. SEVERABILITY.
Any provision of this Site Lease that shall be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 18. RECORDING.
This Site Lease or a memorandum hereof may be recorded by either party
hereto in the appropriate real estate records and Landlord shall pay all costs
of recording and all applicable recording or transfer taxes or related charges.
SECTION 19. DEFAULT.
If during any portion of the Site Lease Term during which Section 16 does
not apply Tenant shall fail to pay any installment of rent within ten (10) days
after written notice that it is due, or if Tenant shall fail to perform any
other obligation under this Site Lease within thirty (30) days after written
notice from Landlord, the Landlord shall have the right to any and all remedies
available for breach of lease under applicable law, including written
termination of Tenant's rights under this Site Lease (provided that in the event
Landlord elects to terminate this Site Lease, the Landlord shall provide Tenant
a written notice of intent to so terminate ten (10) days prior to such
termination), recovery of possession of the Site, collection of all unpaid rent
and damages for breach of lease as provided by law. If an obligation cannot
reasonably be performed within thirty (30) days, then it shall be a sufficient
cure if Tenant commences the cure within the twenty-day period and diligently
prosecutes it to completion within a reasonable time.
Exhibit B - 9
IN WITNESS WHEREOF, the Tenant and the Landlord have caused this Site Lease
to be executed and delivered by their respective duly authorized officers, all
as of the date first above written.
▇▇▇▇ & TALBOT, INC.
By:
-----------------------------------------
Its
--------------------------------------
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By:
-----------------------------------------
Its
--------------------------------------
Exhibit B - 10
Exhibit C - Form of Facility Lease
See Exhibit 4.4 Amended and Restated Facility Lease Between
▇▇▇▇ & ▇▇▇▇▇▇, Inc. and Wilmington Trust Company dated
December 27, 2001.
Exhibit C
Exhibit D - Form of Trust Indenture and Security Agreement
Between Wilmington Trust Company - Owner Trustee and First
Security Bank, National Association - Indenture Trustee (not
included herein).
Exhibit D
Exhibit E - Form of Deed Trust
from Wilmington Trust Company, solely as Trustee To Oregon
Title Insurance Company For the Benefit of First Security
Bank, National Association (not included herein).
Exhibit E